Fair Lending and Your Protections

It is important to know your rights when it comes to fair lending practices. The following articles from the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC) explain 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 OCC notes that 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 protected against credit discrimination by the ECOA and the FHA. According to the CFPB, this means that it is illegal for creditors to do such things as refuse you credit when you qualify for it, offer you 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 of the following examples in the article on the basis of race or 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.

The CFPB also lists 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.

The FTC highlights another important piece related to credit and fair lending – making sure 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.

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