Credit and Lending Discrimination: Know Your Rights

Credit and Lending Discrimination: Know Your Rights

In 1974, when the memories and tragedies of the civil rights movement of the 1960s were still fresh in everyone’s mind, the federal government passed the Equal Credit Opportunity Act (ECOA). It was and is a bill that protects consumers from credit and lending discrimination based on race, religion, ethnicity, sex, gender, sexual orientation, age, or disability.

To say it eliminated those practices entirely would be a fallacy. It took decades to make progress. In some cases, discrimination still exists in financial institutions. Ask a person of color what they’re seeing for interest rates when working on a debt avalanche program, then compare those to the rates of a non-POC. You’re likely to see discrepancies.

Fortunately, additional steps have been taken. The Fair Housing Act (FHA), which was originally enacted in 1968, was amended in 1988 to include familial status, disability, and religion. The Fair Credit Reporting Act (FCRA), which guarantees transparency in credit reporting, has also been amended several times since its inception in 1970.     

How do you know if you’re being discriminated against?

Some discrimination is blatant. The ignorance and vitriol aren’t masked in any way and the consumer leaves the lender with a sick sense of defeat. That’s not right, nor should it be tolerated. If you’ve been a victim of this type of behavior, Call the Federal Trade Commission toll-free at 1-877-FTC-HELP (382-4357). They will walk you through your next steps.

Other discriminatory practices are not so simple to see. In the 1930s, banks often employed a process called “redlining” where they would mark certain areas, usually neighborhoods with people of color or foreign ethnic backgrounds, as “high-risk.” Those neighborhoods were then deemed uninsurable, so residents were unable to get loans and mortgages.

Redlining was eventually banned, but its impact can still be seen in communities across the United States. Even today, some banks employ predatory lending tactics in these communities, offering only higher interest rates and poor terms on loans and mortgages there. It’s getting harder to do, with online lenders now available to compare rates, but it still happens.

Know your rights as a consumer

The Irish philosopher Edmund Burke is famous for saying, “The only thing necessary for the triumph of evil is for good men to do nothing.” Simply accepting that discrimination exists and failing to act on it is exactly what he was talking about.

You have rights. To exercise them, you must know what they are. Here’s a short list of some of the more important ones: 

  • Lenders cannot ask about marital status if you’re applying on your own
  • They can ask about race, sex, or nationality, but you’re not obligated to answer
  • Immigration status is a valid question, but only to verify residency
  • Asking about plans to have children is prohibited
  • Requesting a co-signer when you meet the lending criteria is illegal
  • Lenders must provide a specific reason for declining your application
  • Lenders cannot keep information from you about the process

If you’ve experienced any of this and feel you’re being discriminated against, call the FTC hotline at 1-877-FTC-HELP (382-4357). You can learn more about your rights by reading the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA).    

Kevin Flynn  

Kevin is a former fintech coach and financial services professional. When not on the golf course, he can be found traveling with his wife or spending time with their eight wonderful grandchildren and two cats.  

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By Michael Caine

Michael Caine is the Owner of Amir Articles and also the founder of ANO Digital (Most Powerful Online Content Creator Company), from the USA, studied MBA in 2012, love to play games and write content in different categories.

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