Home Credit Discrimination

Credit Discrimination

Roles of the ECOA and FHA

Roles of the ECOA and FHA

Discrimination is present in all facets of life. An individual may experience prejudice based on their race, sex, religion, ethnicity, or age. Evidence of discrimination can occur in employment offices, in judicial proceedings, and even when an individual is applying for credit. Some lenders have been known to discriminate against certain applicants.
Credit discrimination often involves age discrimination, discrimination against women, and racial discrimination. Federal legislation has been developed in order to combat credit discrimination.
The Federal Fair Housing Act was established in 1968 in order to prevent discrimination during the course of a personal real estate purchase. Under the Federal Fair Housing Act, a creditor is prohibited from discriminating against an applicant who is applying for a loan to purchase, repair or maintain a home. It also forbids discrimination at any point during the sale or rent of a home or an apartment.
To boot, the Federal Fair Housing Act seeks to prevent individuals from discriminating against potential buyers when they are attempting to sell or rent a home, making it illegal to refuse to sell a home to a potential buyer based on their race, sex, religion, or other personal characteristics. It also prohibits the creation or distribution of advertisements for homes that blatantly discriminate against a certain group of people.
Though the Federal Fair Housing Act and the Equal Credit Opportunity Act have not abolished credit discrimination outright, they have made considerable progress in addressing the issue in the United States.

Learn About Age Discrimination

Learn About Age Discrimination

The Equal Credit Opportunity Act (ECOA) was established in order to ensure that all individuals have an equal opportunity to obtain credit. The ECOA prohibits creditors from discriminating against individuals based on their sex, age, race, or marital status. Therefore, creditors cannot deny credit to an individual for any reason that is deemed unacceptable.
An acceptable reason to deny an applicant credit, as harsh as it may seem, is low income. However, there are some instances in which a creditor is not permitted to automatically deny an applicant credit based on their income. In order to avoid age discrimination, the ECOA prohibits creditors from denying an individual credit simply because they rely on Social Security benefits or retirement packages as their primary means of income.
Also, part-time employment cannot automatically disqualify an individual from obtaining credit. These measures have been taken primarily to protect the elderly from age discrimination.
The ECOA defines an elderly person as an individual who has reached the age of 62. In most cases, once an individual reaches this age they will start to consider retirement. An individual who has retired no longer has a steady income as a result of employment, but survives through Social Security benefits, retirement savings plans, and pension plans.
An elderly individual may choose to continue to work part-time in order to keep himself/herself busy or to make some extra money. In either situation, his/her income will be lower relative to the wages earned while he/she was employed in a full-time position.
Creditors generally consider granting credit to elderly individuals to be a risk because they fear that they will be unable to pay the debt that they accrue. As a result, many creditors refuse to extend credit to elderly individuals outright. Since the ECOA was enacted in 1974, however, creditors have been prohibited from discriminating in this manner.
Though the ECOA expresses concern about age discrimination against the elderly, this legislation unfortunately does little to protect young individuals from age discrimination. A creditor may refuse to grant a young adult credit based on their lack of financial experience. If a college student maintains a low income because they only work a limited number of hours every week, a creditor may deny the applicant credit because of their low income.
In most cases, a young adult will be unable to obtain a loan for expensive property, such as a motor vehicle or a house because they have not yet had the opportunity to establish positive credit or because they have not maintained a well-paying job for a long period of time.
Generally, creditors argue that extending large quantities of credit to a young adult is a very risky move, as there is often no evidence that they are financially responsible. However, many individuals feel that denying a young adult credit based on their inexperience is a form of age discrimination, as inexperience does not necessarily equate to irresponsibility. Therefore, although the ECOA has taken steps to prevent age discrimination against the elderly, more needs to be done to combat the same discrimination against young adults.

Learn About Discrimination Against Women

Learn About Discrimination Against Women

Discrimination against women is a serious problem that continues to manifest itself in different ways in the United States. In previous generations, the common mentality regarding women emphasized their responsibility to maintain the household and care for their family, while men were accountable for guaranteeing an income to pay the bills. In the last half century, however, the power and authority held by women has increased a great deal and major strides have been made in discrimination based on sex.
However, discrimination is still intricately interwoven into the consciousness of many people throughout the country, and therefore, it is still present in all arenas, including in domestic situations, employment, and when a women is applying for credit. The Equal Credit Opportunity Act (ECOA), the Federal Fair Housing Act, and state governments have taken steps to end credit discrimination against women.
The Federal Fair Housing Act prohibits a creditor from practicing discrimination against women when a woman is seeking credit for real estate purposes. This includes credit that is intended to be utilized in order to purchase a home and credit that a woman seeks to improve and maintain her home.
The ECOA also prohibits discrimination against women. Indeed, there are various different ways that a creditor may discriminate against women. For example, a creditor may classify a male-specific job, such as a policeman, as more valuable and more important than the female counterpart. Therefore, a man who is employed as a policeman may be granted credit, while a woman who is employed as a policewoman may be extended less credit or denied it altogether.
Collectively, the Federal Fair Housing Act and the Equal Credit Opportunity Act prevent creditors from ignoring alimony, child support, and part-time employment as an adequate form of income. Creditors are also forbidden from forcing married women to include information about their husbands if they are applying for credit on their own.
The Federal Fair Housing Act, the ECOA, and state legislation only require a woman to provide information about her husband if he will have access to the account or if he will be responsible for paying the debt that is accrued on the account. If a married woman will be the only individual with access to the account and she will be solely accountable for the account, then forcing her to include her husband’s information is a form of sexual discrimination.
In addition, the Federal Fair Housing Act and the Equal Credit Opportunity Act forbid discrimination against women based on their marital status. If a creditor considers the joined income of a married couple when authorizing a joint obligation, then they also must consider the combined incomes of an unmarried couple that is applying for the same financial guarantee.
Women may often find it difficult to obtain credit because they may not have the necessary records exhibiting a positive credit history. In many cases, when a woman changes her name after marriage she will lose her credit history. In other instances, a creditor will only list a husband’s name when they report joint accounts for which both spouses have been responsible. Without evidence of a good credit history, an individual will usually be unable to obtain a loan, another one of the many ways that the system discriminates against women.

Be Aware of Racial Discrimination

Be Aware of Racial Discrimination

Many individuals like to believe that racial discrimination is a thing of the past in the United States. Although the United States has made great progress in the realm of civil rights, racial discrimination has in no way disappeared. It is a troubling reality of our nation and of our world.
Individuals who are of a minority racial group often grow up in low-income communities, and they are generally enrolled in inadequate public education systems which are understaffed and underfunded. In light of the ineffective educational systems in these areas, very few individuals from poor communities will continue their education in college. In most cases, these people will be unable to attain a high-paying job, which may lead to trouble obtaining a loan.
Some creditors have been known to disregard income and simply deny credit based on an individual’s race. The United States Federal Government passed the Home Mortgage Disclosure Act and the Community Reinvestment Act in part to curb racially discriminatory practices in extending credit.