What is the Equal Credit Opportunity Act?

The Equal Credit Opportunity Act (ECOA) is a federal law that protects borrowers from discrimination in the granting of credit. The law was passed by Congress in 1974 and applies to all states, including Kansas. Under the law, creditors, including banks, cannot deny credit to borrowers based on their race, color, religion, national origin, age, sex, marital status, or any other discriminatory factor. Creditors must also provide equal terms on any credit extension and cannot ask certain personal questions related to a borrower’s protected status, such as family size or marital status. In addition, the law prohibits creditors from considering negative credit from sources outside of the borrower’s control, such as a bankruptcy filed as a result of an illness or layoff. Creditors must also report any credit extensions and have notification systems in place so that they can inform borrowers of any changes in terms or denial of credit. The ECOA is important for protecting consumers from discrimination in the granting of credit and gives borrowers more control over their financial futures. The law has helped make it possible for borrowers from all walks of life to access credit that they may otherwise be denied due to their personal characteristics.

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What is the Equal Credit Opportunity Act?

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