How can I protect myself from credit discrimination?
Watch for warning signs
Credit discrimination is often hidden or even unintentional, which makes it hard to spot. Look for red flags, such as:
- Treated differently in person than on the phone or online
- Discouraged from applying for credit
- Encouraged or told to apply for a type of loan that has less favorable terms (for example, a higher interest rate)
- Hearing the lender making negative comments about race, national origin, age, sex (including sexual orientation or gender identity), or other protected statuses
- Refused credit even though you qualify for it based on advertised requirements
- Offered credit with a higher rate than you applied for, even though you qualify for a lower rate based on advertised requirements
Ways to prepare before taking out a loan
- Do your research. Shop around. Learn about the benefits and risks of the loan or credit card you want. Research current interest rates. Compare offers from several lenders.
- Know your credit history. Be sure there are no mistakes or missing items in your credit reports. You have the right to request one free copy of your credit reports each year, from each of the three biggest consumer credit reporting companies, by visiting AnnualCreditReport.com. When you visit the site, you may see steps to view more frequently updated reports online. This gives you a greater ability to monitor changes in your credit. If needed, you can ask whether your credit report is available in your preferred language.
- Ask questions about total costs. Look beyond the monthly payment. Be sure you understand your interest rates and the total amount of interest and fees paid over the long run. Ask about which fees and charges may be negotiable.
- Stay in control. Lenders shouldn’t make you feel rushed or unnecessarily delay action on your application. You have a right to receive information in writing -- and in most cases, that means you get timely information on the decision a lender has made about your application for credit.
- Be sure before signing. You shouldn’t ever feel pressured to sign. You should take the time to make sure the credit product and terms work for you. If needed, ask the lender whether help is available in your preferred language.
Get legal help if you believe you have been discriminated against
For legal resources listed state by state, visit lawhelp.org .
To find out about eligibility for assistance from a Legal Services program funded by the Legal Services Corporation, visitlsc.gov/what-legal-aid/find-legal-aid .
To locate your state attorney general’s office, see naag.org/find-my-ag/ .
FAQs
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction. It applies to any extension of credit, including extensions of credit to small businesses, corporations, partnerships, and trusts.
What is protection against discrimination in any credit transaction? ›
prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection ...
Can I sue for credit discrimination? ›
Consider suing the creditor in federal district court. If you win, you can recover your actual damages. The court might award you punitive damages under certain circ*mstances. You also may recover reasonable lawyers' fees and court costs.
Which of the following laws protects against discrimination in lending? ›
The federal fair lending laws—the Equal Credit Opportunity Act and the Fair Housing Act—prohibit discrimination in credit transactions, including transactions related to residential real estate.
What is an example of credit discrimination? ›
Examples of discriminatory actions:
a finance company imposes different terms or conditions, like a higher interest rate or higher fees, on a loan based on an applicant's religion or national origin. an underwriter refuses to guarantee a loan because of an applicant's sex.
What are your rights if you are denied credit? ›
You have the right to get a free copy of your credit report within 60 days of being denied credit. Simply contact the credit reporting agency that provided the credit report and ask for a free report. You can also get a free credit report every 12 months.
What are the laws protecting consumers against unfair credit practices? ›
The Fair Debt Collection Practices Act (FDCPA) applies to personal, family, and household debts. This includes money you owe for the purchase of a car, for medical care, or for charge accounts. The FDCPA prohibits debt collectors from engaging in unfair, deceptive, or abusive practices while collecting these debts.
What are the three types of lending discrimination? ›
There are three types of lending discrimination:
- → Overt.
- → Disparate impact.
- → Disparate treatment.
- Speak with your lender's manager.
- File a complaint with the Consumer Financial Protection Bureau (CFPB).
- File a complaint with the U.S. Office of Fair Housing and Equal Opportunity (FHEO).
The Act (Title VI of the Consumer Credit Protection Act) protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act.
What rights does the Fair Credit Reporting Act restrict? ›
The FCRA specifies those with a valid need for access. reporting agency may not give out information about you to your employer, or a potential employer, without your written consent given to the employer. Written consent generally is not required in the trucking industry.
This Act (Title VII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act.
What is unfair credit reporting? ›
A credit reporting agency failing to correct any errors or explain why the credit report is correct within 30 days of receiving a notice of dispute by the consumer. An entity pulls or checks your credit (“hard inquiry”) when you never authorized them to do so.
What are the three laws created to stop lending discrimination? ›
Today, three federal laws offer protection against such discrimination: The Fair Housing Act (FHA)1. The Equal Credit Opportunity Act (ECOA)2. The Community Reinvestment Act (CRA)3.
What federal law protects against discrimination? ›
Title VII of the Civil Rights Act of 1964. Title VII of the Civil Rights Act, as amended, protects employees and job applicants from employment discrimination based on race, color, religion, sex and national origin.
What is illegal discrimination in lending? ›
Steering a borrower to a loan with less favorable terms because of his or her race, color, religion, sex (including gender, gender identity, sexual orientation, and sexual harassment), familial status, national origin or disability.
