FTC FACTSfor Consumers

CREDIT

1-877-FTC-HELP

FEDERAL TRADE COMMISSION FOR THE CONSUMER

www.ftc.gov

redit is used by millions of consumers to finance an education or a

house, remodel a home, or get a small business loan.

The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given

an equal chance to obtain credit. This doesnít mean all consumers who apply for

credit get it: Factors such as income, expenses, debt, and credit history are

considerations for creditworthiness.

The law protects you when you deal with any creditor who regularly extends

credit, including banks, small loan and finance companies, retail and department

stores, credit card companies, and credit unions. Anyone involved in granting

credit, such as real estate brokers who arrange financing, is covered by the law.

Businesses applying for credit also are protected by the law.

When You Apply For Credit, A Creditor May Not...

● Discourage you from applying because of your sex, marital status, age,

race, national origin, or because you receive public assistance income.

● Ask you to reveal your sex, race, national origin, or religion. A creditor

may ask you to voluntarily disclose this information (except for religion) if

Equal Credit Opportunity

C
Facts for Consumers

youíre applying for a real estate loan. This

information helps federal agencies enforce

anti-discrimination laws. You may be

asked about your residence or immigration

status.

● Ask if youíre widowed or divorced. When

permitted to ask marital status, a creditor

may only use the terms: married, unmarried, or separated.

● Ask about your marital status if youíre

applying for a separate, unsecured account. A creditor may ask you to provide

this information if you live in ìcommunity

propertyî states: Arizona, California,

Idaho, Louisiana, Nevada, New Mexico,

Texas, and Washington. A creditor in any

state may ask for this information if you

apply for a joint account or one secured by

property.

● Request information about your spouse,

except when your spouse is applying with

you; your spouse will be allowed to use

the account; you are relying on your

spouseís income or on alimony or child

support income from a former spouse; or

if you reside in a community property

state.

● Inquire about your plans for having or

raising children.

● Ask if you receive alimony, child support,

or separate maintenance payments, unless

youíre first told that you donít have to

provide this information if you wonít rely

on these payments to get credit. A creditor

may ask if you have to pay alimony, child

support, or separate maintenance payments.

When Deciding To Give You Credit,

A Creditor May Not...

● Consider your sex, marital status, race,

national origin, or religion.

● Consider whether you have a telephone

listing in your name. A creditor may

consider whether you have a phone.

● Consider the race of people in the neighborhood where you want to buy, refinance

or improve a house with borrowed money.

● Consider your age, unless:

● youíre too young to sign contracts,

generally younger than 18 years of age;

● youíre 62 or older, and the creditor will

favor you because of your age;

● itís used to determine the meaning of

other factors important to creditworthiness. For example, a creditor could use

your age to determine if your income

might drop because youíre about to retire;

● itís used in a valid scoring system that

favors applicants age 62 and older. A

credit-scoring system assigns points to

answers you provide to credit application

questions. For example, your length of

employment might be scored differently

depending on your age.

When Evaluating Your Income, A

Creditor May Not...

● Refuse to consider public assistance income the same way as other income.

● Discount income because of your sex or

marital status. For example, a creditor

cannot count a manís salary at 100 percent

and a womanís at 75 percent. A creditor

may not assume a woman of childbearing

age will stop working to raise children.

● Discount or refuse to consider income

because it comes from part-time employment or pension, annuity, or retirement

benefits programs.

● Refuse to consider regular alimony, child

support, or separate maintenance payments. A creditor may ask you to prove

you have received this income consistently.
Facts for Consumers

You Also Have The Right To...

● Have credit in your birth name (Mary

Smith), your first and your spouseís last

name (Mary Jones), or your first name and

a combined last name (Mary Smith-Jones).

● Get credit without a cosigner, if you meet

the creditorís standards.

● Have a cosigner other than your husband

or wife, if one is necessary.

● Keep your own accounts after you change

your name, marital status, reach a certain

age, or retire, unless the creditor has

evidence that youíre not willing or able to

pay.

● Know whether your application was accepted or rejected within 30 days of filing

a complete application.

● Know why your application was rejected.

The creditor must give you a notice that

tells you either the specific reasons for

your rejection or your right to learn the

reasons if you ask within 60 days. Acceptable reasons include: ìYour income was

low,î or ìYou havenít been employed

long enough.î Unacceptable reasons are:

ìYou didnít meet our minimum standards,î or ìYou didnít receive enough

points on our credit-scoring system.î

Indefinite and vague reasons are illegal, so

ask the creditor to be specific.

● Find out why you were offered less favorable terms than you applied for ó unless

you accept the terms. Ask for details.

Examples of less favorable terms include

higher finance charges or less money than

you requested.

● Find out why your account was closed or

why the terms of the account were made

less favorable unless the account was

inactive or delinquent.

A Special Note To Women

A good credit history ó a record of how you

paid past bills ó often is necessary to get

credit. Unfortunately, this hurts many

married, separated, divorced, and widowed

women. There are two common reasons

women donít have credit histories in their own

names: they lost their credit histories when

they married and changed their names; or

creditors reported accounts shared by married

couples in the husbandís name only.

If youíre married, divorced, separated, or

widowed, contact your local credit bureau(s)

to make sure all relevant information is in a

file under your own name.

If You Suspect Discrimination...

● Complain to the creditor. Make it known

youíre aware of the law. The creditor may

find an error or reverse the decision.

● Check with your state Attorney General to

see if the creditor violated state equal

credit opportunity laws. Your state may

decide to prosecute the creditor.

● Bring a case in federal district court. If

you win, you can recover damages, including punative damages. You also can obtain

compensation for attorneyís fees and court

costs. An attorney can advise you on how

to proceed.

● Join with others and file a class action suit.

You may recover punitive damages for the

group of up to $500,000 or one percent of

the creditorís net worth, whichever is less.

● Report violations to the appropriate government agency. If youíre denied credit,

the creditor must give you the name and

address of the agency to contact. While

some of these agencies donít resolve

individual complaints, the information you

provide helps them decide which companies to investigate. A list of agencies

follows.
Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

March 1998

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

1-877-FTC-HELP www.ftc.gov

Facts for Consumers

If a retail store, department store, small loan

and finance company, mortgage company, oil

company, public utility, state credit union,

government lending program, or travel and

expense credit card company is involved,

contact:

Consumer Response Center

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

The FTC cannot intervene in individual

disputes, but the information you provide may

indicate a pattern of possible law violations

that require action by the Commission.

If your complaint concerns a nationallychartered bank (National or N.A. will be part

of the name), write to:

Comptroller of the Currency

Compliance Management

Mail Stop 7-5

Washington, DC 20219

If your complaint concerns a state-chartered

bank that is insured by the Federal Deposit

Insurance Corporation but is not a member of

the Federal Reserve System, write to:

Federal Deposit Insurance Corporation

Consumer Affairs Division

Washington, DC 20429

If your complaint concerns a federallychartered or federally-insured savings and

loan association, write to:

Office of Thrift Supervision

Consumer Affairs Program

Washington, DC 20552

If your complaint concerns a federallychartered credit union, write to:

National Credit Union Administration

Consumer Affairs Division

Washington, DC 20456

Complaints against all kinds of creditors can

be referred to:

Department of Justice

Civil Rights Division

Washington, DC 20530

For More Information

The FTC works for the consumer to prevent

fraudulent, deceptive and unfair business

practices in the marketplace and to provide

information to help consumers spot, stop and

avoid them. To file a complaint or to get free

information on consumer issues, visit

www.ftc.gov or call toll-free, 1-877-FTCHELP (1-877-382-4357); TTY: 1-866-653-

4261. The FTC enters Internet,

telemarketing, identity theft and other fraudrelated complaints into Consumer Sentinel, a

secure, online database available to hundreds

of civil and criminal law enforcement

agencies in the U.S. and abroad.