Equal Credit Opportunity Act facts for kids
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| Acronyms (colloquial) | ECOA |
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| Public law | 88 Stat. 1500, Pub.L. 93-495 |
| Legislative history | |
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| United States Supreme Court cases | |
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The Equal Credit Opportunity Act (ECOA) is a United States law. It was created on October 28, 1974. This law makes it illegal for lenders to treat people unfairly when they apply for credit.
Lenders cannot discriminate based on a person's race, color, religion, or where they come from. They also cannot discriminate based on gender, whether someone is married, or their age. This is true as long as the person is old enough to sign a contract.
The law also protects people who get money from public assistance programs. It also protects those who have used their rights under other consumer protection laws. This rule applies to many types of lenders. These include banks, stores, and credit unions.
A part of this law is called Regulation B. It explains what the law covers and how it works. If a financial company does not follow Regulation B, there are consequences. They could face financial penalties. These penalties can be large, especially if many people are affected.
Before this law, it was common for lenders to treat women differently. They often had harder rules for women applying for loans. Many groups, including women's and civil rights organizations, worked hard to change this. Their efforts helped pass the ECOA.
What the ECOA Stops: Unfair Practices
The ECOA makes it illegal for lenders to do certain things. These rules help make sure everyone gets a fair chance.
- Lenders cannot treat you differently because of your race, gender, age, or background. They also cannot discriminate if you receive public assistance.
- They usually cannot ask about your marital status if you apply for credit by yourself. However, this rule changes if you live in a "community property" state. Also, if you apply for credit with someone else, or use property as security, they can ask.
- Lenders cannot ask if you plan to have children. But they can ask about any children you already have. This includes their ages and your financial duties for them.
- They must count all your regular income. This includes money from veteran's benefits, welfare, or Social Security. They also cannot ignore income from part-time jobs, pensions, or retirement plans.
What the ECOA Requires: Fair Treatment
The ECOA also sets rules for what lenders must do. These rules ensure you get clear information about your credit application.
- Lenders must tell you what happened with your application within 30 days. This notice might be written or spoken, depending on the situation.
- If you are denied credit, they must tell you why. They also must explain how you can find out the reasons. This rule also applies if they close your account. It also applies if they refuse to increase your line of credit. Or if they change your credit terms negatively, but not for others.
How the Law Grew: A Story of Change
When the ECOA was being written, a congresswoman named Lindy Boggs made an important change. She secretly added words to the bill to ban discrimination based on sex or marital status. She did this without telling the other committee members first.
She then showed them the new version of the bill. She told them, "I'm sure it was just an oversight that we didn't have 'sex' or 'marital status' included. I've taken care of that." The committee then approved the bill without any arguments. This shows how one person can make a big difference in creating fair laws.
