# What Is the Equal Credit Opportunity Act (ECOA)?

![Young woman stands in front of her retail shop](https://www.investopedia.com/thmb/8AdPGXebqMkfeSh3WEEJiiYP4zU=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/ECOA-3892480d3c1d47009b48721f41c4f5e9.jpeg)

*— Oscar Wong / Getty Images*

## What Is the Equal Credit Opportunity Act (ECOA)?

The Equal Credit Opportunity Act (ECOA) is a federal civil rights law designed to ensure fair lending practices. Passed in 1974, it prohibits lenders from discriminating against applicants based on personal characteristics, with the exception of their ability to repay the loan.

Specifically, ECOA protects consumers from discrimination based on race, color, religion, national origin, sex, marital status, age, eligibility for public assistance, or the exercise of any rights under the [Consumer Credit Protection Act](https://www.investopedia.com/terms/c/consumer-credit-protection-act-of-1968.asp). The law aims to provide equal access to credit for everyone, promoting fairness in lending.

### Key Takeaways

*   The Equal Credit Opportunity Act (ECOA) was signed into law in 1974 and prohibits lending discrimination in all aspects of a credit transaction.
*   ECOA makes it illegal for lenders to discriminate based on race, color, religion, national origin, sex, marital status, age, the receipt of public assistance, and the applicant's exercise of specific consumer protection laws.  
    
*   The Department of Justice can file lawsuits under ECOA (and the [Fair Housing Act](https://www.investopedia.com/terms/f/fair-housing-act.asp), if the discrimination involves mortgages) where there is a pattern or practice of discrimination.
*   Various federal agencies enforce ECOA, including the [Consumer Finance Protection Bureau (CFPB)](https://www.investopedia.com/terms/c/consumer-financial-protection-bureau-cfpb.asp), the FDIC and the Office of the Comptroller of the Currency.
*   The CFPB enforces ECOA for banks, savings associations, and credit unions holding more than $10 billion in assets.

## How the Equal Credit Opportunity Act (ECOA) Works

The Equal Credit Opportunity Act was enacted in 1974 and is detailed in Title 15 of the United States Code. The act, as implemented by [Regulation B](https://www.investopedia.com/terms/r/regulation-b.asp), states that individuals applying for loans and other credit can be evaluated only using factors directly related to their creditworthiness. It prohibits [creditors](https://www.investopedia.com/terms/c/creditor.asp) and lenders from considering factors that are unrelated to creditworthiness—specifically, the following protected classes:

*   Race
*   Color
*   Religion
*   National origin (including the country of birth)
*   Sex (including gender, sexual orientation, and gender identity)  
    
*   Marital status
*   Age (provided the applicant is old enough to enter into a contract)
*   Participation in a [public assistance program](https://www.investopedia.com/government-assistance-programs-4845368), such as the [Supplemental Nutrition Assistance Program (SNAP)](https://www.investopedia.com/supplemental-nutrition-assistance-program-snap-5187718) or [Social Security Disability Insurance (SSDI)](https://www.investopedia.com/terms/d/disability-insurance.asp)
*   The good faith exercise of any right under the [Consumer Credit Protection Act](https://www.investopedia.com/terms/c/consumer-credit-protection-act-of-1968.asp)

> **Important**
>
> In 2021, the Consumer Financial Protection Bureau clarified that the prohibition against sex discrimination in ECOA and Regulation B encompasses sexual orientation discrimination and gender identity discrimination, including discrimination based on an applicant's nonconformity with sex-based or gender-based stereotypes.

ECOA prohibits discrimination in all aspects of a credit transaction and applies to any organization that extends credit—including banks, small loan and finance companies, retail stores, credit card companies, and [credit unions](https://www.investopedia.com/credit-unions-vs-banks-4590218). It also applies to anyone involved in the decision to grant credit or set credit terms. 

ECOA covers various types of credit, including personal loans, credit cards, [home loans](https://www.investopedia.com/mortgage/mortgage-rates/how-to-find-best-rates/), student loans, car loans, small business loans, and loan modifications. And it's not limited to just consumer loans. ECOA applies to any extension of credit, including those made to small [businesses](https://www.investopedia.com/articles/personal-finance/120915/which-type-organization-best-your-business.asp), corporations, partnerships, and trusts.

## Special Considerations

When a borrower applies for credit, the lender may ask about some of the personal facts that ECOA prohibits. While answering these questions is optional, the information helps federal agencies enforce anti-discrimination laws.

Another aspect of ECOA allows each spouse in a marriage to have a credit history in their own name. Still, if a borrower has any joint accounts with their spouse, the accounts will appear on both [credit reports](https://www.investopedia.com/terms/c/creditreport.asp). That means a spouse’s financial behavior can positively or negatively impact an individual borrower’s credit score.

> **Tip**
>
> If you were turned down for a loan or a line of credit, the lender must tell you in an Adverse Action Notice the specific reasons your application was rejected or disclose that you have the right to request the reason for denial within 60 days of receiving the creditor's notification.

While ECOA prohibits lenders from basing their decisions on [marital status](https://www.investopedia.com/terms/f/filingstatus.asp), some loans, such as mortgages, require a borrower to disclose if they are relying on [alimony](https://www.investopedia.com/terms/a/alimony.asp) or child support income as a basis for obtaining the credit. However, a borrower can't be denied a loan simply because they are divorced.

## Your Equal Credit Opportunity Rights

When you apply for a loan or line of credit, ECOA gives you certain rights:

*   Creditors can only evaluate your credit application based on relevant financial factors like [credit score](https://www.investopedia.com/terms/c/credit_score.asp), income, and debt load.
*   You are entitled to have credit in your birth name (Kim Jones), your first name and your spouse's last name (Kim Smith), or your first name and a combined last name (Kim Jones-Smith).
*   After [changing your name](https://www.investopedia.com/a-guide-to-legally-changing-your-name-on-government-documents-11730276), marital status, or retiring, you have the right to keep your own accounts unless the creditor can prove you're unable to pay.
*   Creditors must notify you within 30 days whether your application was approved or denied.
*   If the creditor denies your application, they must provide a specific reason or disclose that you’re entitled to learn the reason if you ask within 60 days.

Additionally, creditors can't:

*   Impose different terms or conditions—such as a higher [interest rate](https://www.investopedia.com/terms/i/interestrate.asp) or higher fees—if based on your race, color, religion, national origin, sex, marital status, age, or whether you receive public assistance.
*   Refuse to treat public assistance income the same as other types of income.
*   Ask about your marital status if you’re applying for a separate, unsecured account.
*   Ask if you’re [widowed](https://www.investopedia.com/terms/w/widows-exemption.asp) or divorced unless it directly impacts the credit application.

## Detecting the Signs of Credit Discrimination

Credit discrimination is not always obvious, which makes it hard to spot. CFPB advises consumers to watch for warning signs of ECOA violations:

*   You notice that you are treated differently when applying for credit in person compared to over the phone or online.
*   Lenders discourage you from applying for credit, even when you are interested and eligible.
*   You hear the lender making derogatory comments related to race, national origin, sex, or other protected categories.
*   You are denied credit even though you meet the advertised requirements for eligibility.
*   You are offered credit with a higher interest rate than the one you originally applied for, despite meeting the criteria for the lower rate.
*   You are denied credit, but the lender does not provide a reason or offer information on how to inquire further.
*   You feel pressured or coerced into signing a credit agreement.

## What to Do If You Suspect Discrimination

If you believe you've been discriminated against, there are several steps you can take:

*   First, contact the creditor to complain. You may be able to persuade the company to take a second look at your application.
*   Check with your state attorney general’s office to see if the creditor violated any state equal credit opportunity laws.
*   Report suspected violations to the appropriate government agency. If you’re denied credit, the creditor must provide contact information for the particular government agency. 
*   Submit a complaint to the Consumer Financial Protection Bureau. These complaints help the CFPB identify cases and patterns of discrimination and fair-lending law violations. 
*   Consider suing the creditor in federal district court. If the court finds the creditor’s actions were willful, you could recover actual damages and win punitive damages.

## Examples of Equal Credit Opportunity Act (ECOA) Enforcement

One common violation of the ECOA is charging higher rates or fees to Black, Indigenous, and People of Color (BIPOC) applicants.

In July 2012, the Department of Justice (DOJ) reached a settlement of more than $175 million with Wells Fargo Bank for a pattern or practice of discriminatory lending. Black and Hispanic borrowers who qualified for loans were charged higher fees or rates or were improperly placed into [subprime loans](https://www.investopedia.com/terms/s/subprimeloan.asp), which are more costly.

In January 2017, a $53 million settlement was made against JPMorgan Chase for lending discrimination based on race and national origin. The DOJ found that the bank's brokers charged higher interest rates to BIPOC borrowers than White borrowers in the run-up to and during the 2008 [financial crisis](https://www.investopedia.com/terms/f/financial-crisis.asp).

On Nov. 8, 2023, Citibank was ordered by the CFPB to pay a $24.5 million civil penalty as a result of Citibank's discriminatory practices against credit card applicants of Armenian national origin between 2015 and 2021.

According to the CFPB, Citibank subjected these applicants to extra scrutiny, negative assessments, and frequent denials. Additionally, the CFPB said that Citibank failed to provide adequate reasons for these actions, violating ECOA and the Consumer Financial Protection Act (CFPA). Citibank is required to compensate affected consumers with $1.4 million and implement measures to prevent future discrimination.

## Who Supervises the Equal Credit Opportunity Act (ECOA)?

The Consumer Financial Protection Bureau (CFPB) writes rules to implement ECOA and supervises institutions (e.g., banks and lending companies) to ensure they follow the law. Several other federal agencies share the job of supervising for compliance, including the:

*   [Federal Deposit Insurance Corporation (FDIC)](https://www.investopedia.com/terms/f/fdic.asp)
*   [National Credit Union Administration (NCUA)](https://www.investopedia.com/terms/n/ncua.asp)
*   [Federal Reserve Board (FRB)](https://www.investopedia.com/terms/f/frb.asp)
*   [Office of the Comptroller of the Currency (OCC)](https://www.investopedia.com/terms/o/office-comptroller-currency-occ.asp)

The CFPB enforces ECOA with the agencies listed above, the Department of Justice, and the Federal Trade Commission.

## What Is the Penalty for Violating the Equal Credit Opportunity Act (ECOA)?

Lenders found in violation of ECOA can potentially face class-action lawsuits from the Department of Justice (DOJ) if the DOJ or any affiliate agencies recognize a pattern of discrimination. The Consumer Financial Protection Bureau enforces ECOA with other federal agencies. If found guilty, the offending organization could have to pay out [punitive damages](https://www.investopedia.com/terms/p/punitive-damages.asp) that can be significant and cover any costs incurred by the wronged party.

## Does ECOA Apply to All Creditors?

Yes, the Equal Credit Opportunity Act applies to all creditors. Financial institutions and other firms engaged in the extension of credit can't discriminate against an applicant based on a prohibited basis during any aspect of a credit transaction. Additionally, lending officers and employees can't do anything that would, on a prohibited basis, discourage a reasonable person from applying for a loan.

## The Bottom Line

The Equal Credit Opportunity Act (ECOA) is a vital federal law that ensures fairness in lending by prohibiting discrimination in credit transactions. It applies to all types of credit and creditors, promoting equal access to credit for all individuals. Consumers should remain vigilant for signs of discrimination and know their rights under ECOA. If discrimination is suspected, there are multiple steps available, from reporting to legal action, to help ensure a fair lending process.  

> **Article Sources**
>
> 1.  Federal Deposit Insurance Corporation. "[Equal Credit Opportunity Act (ECOA)](https://www.fdic.gov/resources/supervision-and-examinations/consumer-compliance-examination-manual/documents/5/v-7-1.pdf)."
>     
> 2.  U.S. Department of Justice. "[The Equal Credit Opportunity Act](https://www.justice.gov/crt/equal-credit-opportunity-act-3)."
>     
> 3.  Consumer Finance Protection Bureau. "[What You Need to Know About the Equal Credit Opportunity Act and How It Can Help You: Why It Was Passed and What It Is](https://www.consumerfinance.gov/about-us/blog/what-you-need-know-about-equal-credit-opportunity-act-and-how-it-can-help-you-why-it-was-passed-and-what-it/)."
>     
> 4.  National Credit Union Administration. "[Equal Credit Opportunity Act](https://www.ncua.gov/regulation-supervision/manuals-guides/federal-consumer-financial-protection-guide/compliance-management/lending-regulations/equal-credit-opportunity-act-regulation-b)."
>     
> 5.  United States Code. "[15 USC Chapter 41, Subchapter IV: Equal Credit Opportunity](https://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title15-chapter41-subchapter4&edition=prelim#)."
>     
> 6.  Consumer Financial Protection Bureau. "[What You Need to Know About the Equal Credit Opportunity Act and How It Can Help You: Why It Was Passed and What It Is](https://www.consumerfinance.gov/about-us/blog/what-you-need-know-about-equal-credit-opportunity-act-and-how-it-can-help-you-why-it-was-passed-and-what-it/)."
>     
> 7.  Consumer Financial Protection Bureau. "[Providing Equal Credit Opportunities (ECOA)](https://www.consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/equal-credit-opportunity-act/)."
>     
> 8.  Federal Deposit Insurance Corporation. "[Policy Statement on Discrimination in Lending](https://www.fdic.gov/regulations/laws/rules/5000-3860.html)."
>     
> 9.  Federal Trade Commission. "[Your Equal Credit Opportunity Rights](https://consumer.ftc.gov/articles/0347-your-equal-credit-opportunity-rights#apply)."
>     
> 10.  Code of Federal Regulations. "[§ 1002.13 Information for Monitoring Purposes](https://www.ecfr.gov/current/title-12/chapter-X/part-1002/section-1002.13)."
>      
> 11.  Capital One. "[Marriage and Credit Scores: What You Need to Know](https://www.capitalone.com/learn-grow/money-management/what-happens-to-credit-when-you-get-married/)."
>      
> 12.  Consumer Financial Protection Board. "[My Credit Application Was Denied Because of My Credit Report. What Can I Do?](https://www.consumerfinance.gov/ask-cfpb/my-credit-application-was-denied-because-of-my-credit-report-what-can-i-do-en-1253/)"
>      
> 13.  Consumer Financial Protection Board. "[CFPB Consumer Laws and Regulations, ECOA](https://files.consumerfinance.gov/f/201306_cfpb_laws-and-regulations_ecoa-combined-june-2013.pdf)."
>      
> 14.  Consumer Financial Protection Board. "[12 CFR Part 1002 (Regulation B)](https://www.consumerfinance.gov/rules-policy/regulations/1002/1/)."
>      
> 15.  Consumer Financial Protection Board. "[12 CFR Part 1002 (Regulation B)](https://www.consumerfinance.gov/rules-policy/regulations/1002/1/)."
>      
> 16.  Consumer Financial Protection Bureau. “[What Protections Do I Have Against Credit Discrimination?](https://www.consumerfinance.gov/fair-lending/)”
>      
> 17.  National Association of Attorneys General. “[Find My AG](https://www.naag.org/find-my-ag/).”
>      
> 18.  Consumer Financial Protection Bureau. "[Submit a Complaint](https://www.consumerfinance.gov/complaint/)."
>      
> 19.  Federal Trade Commission. "[Mortgage Discrimination](https://consumer.ftc.gov/articles/mortgage-discrimination)."
>      
> 20.  U.S. Department of Justice. “[Justice Department Reaches Settlement With Wells Fargo Resulting in More Than $175 Million in Relief for Homeowners to Resolve Fair Lending Claims](https://www.justice.gov/opa/pr/justice-department-reaches-settlement-wells-fargo-resulting-more-175-million-relief).”
>      
> 21.  U.S. Department of Justice. "[Manhattan U.S. Attorney Settles Lending Discrimination Suit Against JPMorgan Chase for $53 Million](https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-settles-lending-discrimination-suit-against-jpmorgan-chase-53)."
>      
> 22.  Consumer Finance Protection Bureau. "[Enforcement Actions: CitiBank, N.A.](https://www.consumerfinance.gov/enforcement/actions/citibank-n-a/)"
>      
> 23.  Consumer Finance Protection Bureau. "[Enforcement Actions: CitiBank, N.A.](https://www.consumerfinance.gov/enforcement/actions/citibank-n-a/)"
>      
> 24.  Consumer Financial Protection Bureau. "[What You Need To Know About The Equal Credit Opportunity Act and How It Can Help You: Why It Was Passed and What It Is](https://www.consumerfinance.gov/about-us/blog/what-you-need-know-about-equal-credit-opportunity-act-and-how-it-can-help-you-why-it-was-passed-and-what-it/)."
>      
> 25.  Consumer Financial Protection Board. "[12 CFR Part 1002 (Regulation B)](https://www.consumerfinance.gov/rules-policy/regulations/1002/1/)."