Equal Credit Opportunity Act

Name: Equal Credit Opportunity Act
Author: KnowledgeCity

Learn about Equal Credit Opportunity Act (ECOA)

Preview the first lesson free — get full access to all 3 lessons.

Course: On-Demand

(upbeat music) In Equal Credit Opportunity Act we will go over for the ECOA. The concept of adverse action and enforcement of the ECOA. The Equal Credit Opportunity Act is designed to prevent discrimination from occurring and give every American an equal opportunity to obtain credit. The ECOA is also known as the Title VII of the Consumer Credit Protection Act. The ECOA prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age if the applicant is old enough to legally sign a contract. An individual's income source for example, if a portion came from public assistance such as supplemental security income. Or because the individual has exercised their rights under the Consumer Credit Protection Act. This doesn't mean creditors cannot ask about this information. There are some situations where creditors are required to ask about some of this information. But creditors cannot use this information to make decisions on improving or denying credit and the credit terms such as the interest rate. Every organization that regularly issues credit and individuals involved in the process of issuing credit must be in compliance with the act. This includes businesses such as banks, credit card companies, retail and department stores, credit unions, and small loan and finance companies. Even real estate agents may need to be in compliance with the law if they assist in arranging financing. This act isn't limited to the process of issuing credit. It also includes denying credit and making modifications to existing credit. It is also not limited to protecting those who apply for credit. Creditors cannot discourage an applicant from applying by using comments or advertising that excludes a prohibited basis as defined by the act. regulation B implements the ECOA. The regulation states would creditors are allowed to do, are required to do and cannot do during credit transactions. These are spelled out in a series of rules in the regulation. According to the Consumer Financial Protection Bureau, credit transactions and aspects of credit transactions can include consumer credit, business credit, mortgages, refinancing, open-end credit, credit applications, standards of credit worthiness and adverse action. Discrimination in lending maybe difficult to notice because most of the time it takes place behind the scenes. But there is some signs lending discrimination might be occurring. Some of these signs include being denied a loan despite meeting the advertised requirements. Being offered a higher interest rate despite meeting the requirements for the one advertised. Receiving different treatment in person compared to treatment received on the phone. Being discouraged from applying for credit or from applying for a specific type of credit. Or being required to have a co-signer despite meeting all the requirements. (upbeat music)

Beginner Provider : KnowledgeCity 3 Lessons · 6m in Arabic, German, English, Spanish, French, Portuguese, Chinese

Course Description

The Equal Credit Opportunity Act (ECOA), also known as Title VII of the Consumer Credit Protection Act, is intended to ensure that every American has an equal opportunity to obtain credit. A wide variety of businesses, including credit card companies and banks, are required to comply with this law. These creditors cannot deny a person credit based on discriminatory criteria like race, color, religion, national origin, sex, marital status, or age.

In this course, you will learn more about the intention of the Equal Credit Opportunity Act, which businesses need to comply with the Act, and what factors a creditor is prohibited from considering in their lending decisions under this law. You will learn about the concept of adverse action and the enforcement of ECOA.

What You'll Learn

Understand why the Equal Credit Opportunity Act (ECOA) was created and its intention to ensure equal opportunity to obtain credit
Identify which businesses, including credit card companies and banks, must comply with the Act
Recognize the groups and criteria protected under ECOA, such as race, color, religion, national origin, sex, marital status, and age
Explain the concept of adverse action under the Equal Credit Opportunity Act
Describe how the Equal Credit Opportunity Act is enforced

Key Takeaways

The Equal Credit Opportunity Act, also known as Title VII of the Consumer Credit Protection Act, is intended to ensure that every American has an equal opportunity to obtain credit.
A wide variety of businesses, including credit card companies and banks, are required to comply with the Act.
Creditors cannot deny a person credit based on discriminatory criteria like race, color, religion, national origin, sex, marital status, or age.
The course covers the concept of adverse action and the enforcement of ECOA.

Frequently Asked Questions

What does this course cover?

The course covers the intention of the Equal Credit Opportunity Act, which businesses need to comply with it, what factors a creditor is prohibited from considering in lending decisions, the concept of adverse action, and the enforcement of ECOA.

Who is required to comply with the Equal Credit Opportunity Act?

A wide variety of businesses, including credit card companies and banks, are required to comply with this law.

What factors are creditors prohibited from considering under ECOA?

Creditors cannot deny a person credit based on discriminatory criteria like race, color, religion, national origin, sex, marital status, or age.

What lessons are included in this course?

The course includes three lessons: ECOA, Adverse Action, and Enforcement.