What is the Equal Credit Opportunity Act?

The Equal Credit Opportunity Act (ECOA) is a federal law that was enacted in 1974 to protect consumers from discrimination in credit transactions. The ECOA is enforced by the Federal Trade Commission and the Consumer Financial Protection Bureau. The ECOA prohibits lenders from denying credit based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. The ECOA also requires lenders to provide applicants with written explanations of their adverse action. If a lender denies credit, they must provide written notification of the denial including the specific reasons why the credit was denied. In California, the ECOA is supplemented by the Unruh Civil Rights Act which makes it unlawful for businesses to discriminate against customers on the basis of race, gender, national origin, or religion. California also has a few additional laws to protect consumers such as the California Financing Law, which requires loan brokers and other finance lenders to be licensed by the California Department of Business Oversight. The Unruh Civil Rights Act and California Financing Law are in addition to the protections provided by the ECOA. The ECOA is designed to provide a level playing field for credit applicants, making sure that all applicants have an equal opportunity to access credit regardless of race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. The ECOA provides a valuable tool for consumers to ensure that they are not discriminated against when applying for credit.

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What is the Equal Credit Opportunity Act?

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