What are three categories under ECOA on which creditors may not base credit decisions?

Asked by: Miss Grace Ferry  |  Last update: January 15, 2025
Score: 4.6/5 (28 votes)

Except as otherwise permitted or required by law, a creditor shall not consider race, color, religion, national origin, or sex (or an applicant's or other person's decision not to provide the information) in any aspect of a credit transaction.

What are the categories under ECOA?

This Act (Title VII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act.

Under which a creditor may not discriminate in granting credit?

Discriminatory Credit Practices Defined

ECOA prohibits discrimination in any aspect of a credit transaction. It applies to any extension of credit, including extensions of credit to small businesses, corporations, partnerships, and trusts.

Does ECOA apply to all creditors?

The Equal Credit Opportunity Act (ECOA), which is implemented by Regulation B, applies to all creditors. When originally enacted, ECOA gave the Federal Reserve Board responsibility for prescribing the implementing regulation.

Which of the following is not true concerning ecoa?

Which of the following is not true concerning ECOA? The answer is it requires the disclosure of the APR on all advertisements which contain an interest rate.

Fair Housing 2021: What Counselors Need to Know: Credit and Lending Discrimination Under ECOA/FHA

27 related questions found

What categories under ECOA on which creditors may not base credit decisions?

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives ...

What are the three types of fair lending discrimination?

The courts have recognized three methods of proof of lending discrimination under the ECOA and the FHAct: Overt evidence of disparate treatment; • Comparative evidence of disparate treatment; and • Evidence of disparate impact.

What may a lender not ask a borrower about under the ECOA Equal Credit Opportunity Act?

When an applicant applies for individual credit, the bank may not ask the applicant's marital status. There are two exceptions to this rule: If the credit transaction is to be secured, the bank may ask the applicant's marital status.

What three types of information do creditors use to determine a prospective borrower's creditworthiness?

What three types of information do creditors use to determine a prospective​ borrower's creditworthiness? Creditors use credit​ history, income, and amount of current debt.

What is required on an adverse action notice?

This final adverse action notice must include the name, phone number, and address of the CRA that completed the report, language around the fact that candidates have the right to dispute the accuracy of results and can obtain an additional free report within 60 days, and confirmation that the CRA did not make the ...

What are the only three reasons a creditor may deny credit?

What are the only three reasons a creditor may deny credit?
  • Credit report showing past records of an individual where there is a poor performance of making payments.
  • Credit report showing that an individual has a low source of income.
  • Credit report showing that the individual's accumulated debts in the present.

What is an example of an ECOA violation?

Imposing unfair terms or conditions on a loan (such as lower loan amount or higher interest rates) based on personal characteristics protected under the ECOA. Asking detailed personal information regarding marital status, such as whether you are widowed or divorced.

Which of the following is not an impact of credit decisions?

Poor credit decisions can have a significant impact on various aspects of a person's financial life. However, they do not directly affect jobs. While poor credit may make it more difficult to get hired for certain positions, it does not directly determine employment status.

What is the ECOA credit decision?

prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection ...

Which of the following are protected classes under fhact and ECOA?

Under the Fair Housing Act, they defined a protected class as a number of things and this includes race or color, national origin, religion, sex, familial status, which includes children under 18 living at home, and handicap.

What are the 3 C's of credit collateral?

Character, capital (or collateral), and capacity make up the three C's of credit. Credit history, sufficient finances for repayment, and collateral are all factors in establishing credit.

What are 3 types of accounts you might find in a typical credit report?

There are three types of accounts that commonly appear in credit reports: installment, revolving and collection accounts. The installment and revolving accounts can include different types of loans and cards, and they may help or hurt your credit scores. Collection accounts will never help your credit.

What are the rules of ECOA?

The regulation covers topics such as:
  • Discrimination.
  • Discouragement.
  • Notification of action taken (including adverse action)
  • Appraisal and other written valuations.
  • Special purpose credit programs.
  • Limitation on collection of certain protected information.
  • Self-testing and self-correction.
  • Evaluation of applications.

What are the three main fair lending regulations?

What are the Main Fair Lending Laws & Regulations?
  • Fair Housing Act. There was an old woman who lived in a shoe. ...
  • Equal Credit Opportunities Act. ...
  • Home Mortgage Disclosure Act.

What types of loans does ECOA cover?

ECOA applies to various types of loans including car loans, credit cards, home loans, student loans, and small business loans.

What are two questions you should avoid asking based on ECOA?

Your marital status cannot be used against you when evaluating your credit application. Any questions about your race, ethnicity and gender cannot be used as a reason to approve or deny your credit application.

What is the prohibited basis under ECOA?

This Act (Title VII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act.

What are the three main forms of discrimination?

6.1 Direct, indirect, subtle and adverse effect discrimination.

What are the three laws created to stop lending discrimination?

Today, three federal laws offer protection against such discrimination: The Fair Housing Act (FHA)1. The Equal Credit Opportunity Act (ECOA)2. The Community Reinvestment Act (CRA)3.