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Equal Credit Opportunity Act (ECOA)
 Jun 08, 2004

The Equal Credit Opportunity Act (ECOA) provides the opportunity to have equal rights when it comes to credit. Under the definition of the ECOA regulations forbid denying credit based on specific criteria. Keep reading to find out how the ECOA applies to you.

Today, one of the most important aspects of personal finances is credit. While credit can be dangerous, it is also the very thing that allows us to afford cars, homes and education. Without credit, many people would not be able to enjoy the simple things that they have. Additionally, being issued credit is a sign of financial maturity and responsibility. This is why some employers, landlords and insurance agents check your credit. If you cannot get credit, you will find all sorts of difficulties in getting the things you need and want.

Unfortunately, there are some who would discriminate against you based on characteristics that have nothing to do with your financial health. This practice is illegal, and you are specifically protected against discrimination when you go to apply for credit. The Equal Credit Opportunity Act (ECOA) says that everyone should have an equal chance of getting credit, based upon their financial merits.

Here are the items that creditors cannot use when making a decision about whether or not to issue you credit:

  • Religion
  • Race
  • National origin.
  • Ethnicity
  • Gender
  • Marital status
  • Sexual orientation
  • Age

Additionally, it is illegal for potential creditors to discount you based on the receipt of regular public assistance. If you have reliable and approved public assistance, it can be counted as income.

Some creditors collect this information. Except in the case of religion, it is acceptable to collect this information for marketing and demographic purposes. It cannot, however, be used as part of the credit approval process.

ECOA and being denied credit

Just because the Equal Credit Opportunity Act says that you have to be considered for credit, does not mean that you will get credit. There are still valid ways that you may be denied credit. These ways include:

  • Insufficient income
  • High debt to income ratio
  • Short credit history
  • Too many negative items on your credit report
  • Your credit score

However, if a creditor denies you based on any of the above items, you must be provided with the reason. Most of the time, this reason is usually to do with the debt you already have, the length of your credit history or your income. Additionally, if you are denied credit based on information the creditor obtained from a credit bureau, you must be provided with the address and other contact information. You have the right to get a free copy of your credit report.

Your credit is a very important aspect of your personal finances. You need to have the ability to get credit in order to function at a normal financial level in today's society. If you have been discriminated against with regard to credit, the Equal Opportunity Credit Act offers you a path to follow for recourse. You can have the problem remedied and get the credit you need.

For more information on your credit-related rights, as well as other consumer protections offered by the law, you can visit the Web site run by the Federal Trade Commission (

Related Article: Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA) >>

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