One of the biggest problems in obtaining credit is establishing a credit history. People who have never been issued a credit card or have never taken out a loan may have a difficult time establishing credit. At times, the elderly and those who have recently divorced experience difficulty in obtaining credit. Federal law, however, prohibits creditors from denying credit solely on the basis of race, religion, color, ethnic origin, age, gender, source of income, or marital status.
The federal law known as the Equal Credit Opportunity Act ensures that your credit or loan application will be assessed only on the strength of your "credit worthiness" (ability and willingness to repay) and not on any arbitrary or discriminatory practices. Creditors are prohibited from denying credit on the basis of religion, race, national origin, gender, marital status, or source of income. This covers retail installment contracts, credit cards, mortgages and all other types of personal (consumer) loans.
Creditors determine "credit worthiness" based on present debt-load, income, past payment record, and general financial stability. (For more information on credit reports, refer to the section on Credit Reporting) The creditor has 30 days to review an application and make a decision. If the creditor denies the credit, the applicant must be given the specific reason(s) for denial. Creditors are not allowed to:
Example: Ava and Eddie Greenacre are recently retired, with their pensions and Social Security benefits as their primary sources of income. They decide they need to buy a new car, so Eddie applies for an auto loan at the bank where they've done business for 30 years. Eddie is told that they will have to have a cosigner for the loan, preferably one of their employed adult children, because their income is "unstable." Ava receives a letter from the bank's credit department telling her that she has to reapply for her Vista Account due to her retirement. Ava and Eddie Greenacre probably have a case for credit discrimination against their bank under the Equal Credit Opportunity Act.
If the application is for a home mortgage, the creditor may ask about race, religion, and national origin but you are under no obligation to provide this information. The information is used by the federal government to check for discriminatory practices and may not be used by the creditor to deny your mortgage application.
Points To Remember
Where To Go If You Have A Problem
If you believe that you have been a victim of discrimination under the Equal Credit Opportunity Act, contact the company's credit manager and discuss the situation with him or her.
Contact the NH Consumer Protection and Antitrust Bureau:
NH Consumer Protection and Antitrust Bureau
33 Capitol Street
Concord, NH 03301-6397
Contact the US Department of Housing and Urban Development (HUD) if you believe you have suffered discrimination in being turned down for a home mortgage:
US Department of Housing and Urban Development
451 Seventh Street, SW
Washington, DC 20410-2000
TDD: 1-800-927-9275 (toll-free)
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New Hampshire Department of Justice | 33 Capitol Street | Concord, NH | 03301