Fair Lending
July 1, 2022
It is valuable to know your rights when it comes to fair lending. A few fair lending laws and practices addressed below include who is protected by fair lending laws, what credit discrimination is and the warning signs associated with it, and how to ensure credit history is in your name.
The Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA) protect consumers from unfair and discriminatory lending practices. The FHA prohibits discrimination in residential real estate-related transactions based on race or color, national origin, religion, sex, familial status, and handicap. Additionally, the ECOA prohibits discrimination in credit transactions based on the protected statuses mentioned above, as well as marital status, age, receipt of income from a public assistance program, and the applicant’s exercise of any right under the Consumer Credit Protection Act.
Consumers are also protected against credit discrimination by the ECOA and the FHA. This makes it illegal for creditors to do such things as refuse credit when you qualify for it, offer credit on terms that are less favorable, such as a higher interest rate than terms offered to someone with similar qualifications, to close your account, or any other reason related to race or skin color, religion, national origin, sex, marital status, age, receipt of income from a public assistance program, or the applicant’s exercise of any right under the Consumer Credit Protection Act.
There are certain warning signs to look for when attempting to spot credit discrimination. A few red flags include different treatment in person than over the phone, encouraging you to apply for a loan that has less favorable terms, overhearing negative comments about race, national origin, age, sex, or other protected statuses from a lender, refusing credit in spite of meeting the qualifications mentioned in the advertising requirements, and offering credit with a higher rate than you applied for when you qualified for a lower rate based on advertising requirements.
One of the most important steps you can take in relation to credit and fair lending is to confirm your credit history is in your name. A good credit history is often necessary to get credit, and this history must be in your name. However, there are two common reasons why individuals sometimes do not have credit histories in their names: They may have lost their credit histories when they married and changed their names, or creditors may have reported the accounts of married couples under one name only. For individuals who are married, separated, divorced, or widowed, it is important to contact your local credit reporting companies to ensure bill payment history is filed under your own name.