The federal Equal Credit Opportunity Act (ECOA) prohibits discrimination based on race, color, religion, national origin, sex, marital status, or age in the granting of credit. Note that ECOA protects more classes of persons than the Fair Housing Act. The ECOA bars discrimination on the basis of marital status and age. It also prevents lenders from discriminating against recipients of public assistance programs, food stamps, or Social Security.
The ECOA requires that credit applications be considered only on the basis of :
- income,
- net worth,
- job stability, and
- credit rating.
Other Lending Prohibitions – Lending
- A creditor may not consider age unless the applicant is too young to legally sign a contract, which is usually 18,
- the creditor may consider age when determining if income will drop due to retirement.
- Lenders are prohibited from discriminating against recipients of public assistance programs such as food stamps and Social Security.
- Lenders may not ask questions about a spouse unless the spouse is also applying for credit (e.g., lenders may not discount a woman’s income or assume that she will leave the workforce to raise children).
The agency that enforces ECOA depends on the type of financial institution. In general, the ECOA is enforced by the Federal Trade Commission (FTC) and the Department of Justice as well as other agencies.
