What is the Equal Credit Opportunity Act?

The Equal Credit Opportunity Act (ECOA) is a federal law that prohibits discrimination based on race, color, religion, sex, national origin, age, marital status, or source of income when it comes to credit practices. This law applies to all banks and other lending institutions that are based in Delaware and across the country. The ECOA was passed in 1974 as an amendment to the Consumer Credit Protection Act. It was designed to make sure that all consumers have an equal opportunity to receive credit, regardless of their personal circumstances. The law requires that all lenders must provide equal access to credit and must make lending decisions based on the borrower’s creditworthiness, rather than their personal characteristics mentioned above. Lenders must also make sure that borrowers are provided accurate information about their credit and that the process is fair. The ECOA also requires lenders to disclose any information they rely on when making a lending decision. This allows the borrower to understand why their loan was denied or approved. In addition, the law prohibits lenders from asking questions about a potential borrower’s race, religion, or other personal characteristics which are not related to the loan application. The ECOA is enforced by the federal government through the Consumer Financial Protection Bureau. The CFPB has the authority to investigate banks and other lending institutions for violations of the law and to take corrective action. Enforcement of the ECOA also extends to state and local governments.

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