Facts for Consumers from the Federal Trade Commission

Equal Credit Opportunity -- September 1992

If you still think only of credit cards when you hear the word "credit," think again. Credit is used by millions of consumers for a variety of purposes: to finance education, remodel homes, obtain small business loans, and for home mortgages.

A law passed by Congress ensures that all consumers will be given an equal chance to receive credit. The Equal Credit Opportunity Act says it is illegal for creditors to discriminate against applicants on the basis of their sex, marital status, race, national origin, religion, age or because they get public assistance income. This does not mean all consumers who apply for credit will get it. Creditors can still use factors such as income, expense, debts, and credit history to judge applicants. The law protects you when dealing with any creditor who regularly extends credit, including: banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Anyone participating in the decision to grant credit, such as real estate brokers who arrange financing, is covered by the law. Businesses applying for credit are protected by the law, too.

Consumers have equal rights in every phase of the credit application process. Here is a checklist of important rights to remember when you request credit:

When You Apply For Credit, A Creditor May Not...

Discourage you from applying because of your sex, marital status, age, national origin, or because you receive public assistance income.

Ask you to reveal your sex, race, national origin, or religion. A creditor may ask you to voluntarily disclose this information if you are applying for a real estate loan. This information helps federal agencies enforce anti-discrimination laws. A creditor may ask what your residence or immigration status is.

Ask whether you are divorced or widowed.

Ask what your marital status is if you are applying for a separate, unsecured account. A creditor may ask you to reveal this information if you live in the "community property" states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. In any state, a creditor may ask for this information if you apply for a joint account or any account secured by property.

Ask you for information about your husband or wife. A creditor may ask about your spouse if: your spouse is applying with you; your spouse will be allowed to use the account; you are relying on your spouse's income or on alimony or child support income from a former spouse; or if you reside in a community property state (listed above).

Ask about your plans for having or raising children.

Ask if you receive alimony, child support, or separate maintenance payments. A creditor may ask for this information if you are first told that you don't have to reveal it if you won't rely on it to get credit. A creditor may ask if you have to pay alimony, child support, or separate maintenance payments.

When Deciding To Give You Credit, A Creditor May Not...

Consider your sex, marital status, race, national origin, or religion.

Consider whether you have a telephone listing in your name. A creditor may consider whether there is a phone in your home.

Consider the race of the people who live in the neighborhood where you want to buy or improve a house with borrowed money.

Consider your age, with certain exceptions:

-- if you are too young to sign contracts. Generally, this applies to those 18 and under.

-- if you are 62 or over, and the creditor will favor you because of your age.

-- if it is used to determine the meaning of other factors which are important to credit-worthiness. For example, a creditor could use your age to see if your income might be reduced because you are about to retire.

-- if it is used in a scoring system which favors applicants age 62 and over. A credit-scoring system assigns different points to your answers to application questions. For example, owning a home might be worth 10 points, while renting might be worth 5.

The total number of points helps the creditor to decide if you are credit-worthy.

When Evaluating Your Income, A Creditor May Not...

Refuse to consider reliable public assistance income in same manner as other income.

Discount income because of your sex or marital status. For example, a creditor cannot count a man's salary at 100% and a woman's at 75%. A creditor may not assume a woman of child-bearing age will stop work to raise children.

Discount or refuse to consider income because it is derived from part-time employment or from pension, annuity, or retirement benefits programs.

Refuse to consider consistently-received alimony, child support, or separate maintenance payments. A creditor may ask you for proof that this income has been received consistently.

You Also Have The Right...

To have credit in your birth name (Mary Smith), your first and your spouse's last name (Mary Jones), or your first name and a combined last name (Mary Smith-Jones).

To get credit without a co-signer, if you meet the creditor's standards.

To have a co-signer other than your husband or wife, if one is necessary.

To keep your own accounts after you change your name, marital status, reach a certain age, or retire, unless the creditor had evidence that you are unable or unwilling to pay.

To know whether your application was accepted or rejected within 30 days of filing it.

To know why your application was rejected. The creditor must either immediately give you the specific reasons for your rejection or tell you of your right to learn the reason if you ask them within 60 days. (Examples of reasons are: "Your income was low," or "You haven't been employed long enough." Examples of unacceptable reasons are: "You didn't meet our minimum standards," or "You didn't receive enough points on our credit-scoring system.") Indefinite and vague reasons are illegal--ask for specifics.

To learn the specific reasons why you were offered less favorable terms than you applied for. Example of less favorable terms include higher finance charges or less money than you requested. This does not hold if you accept the less favorable terms.

To know the specific reasons why your account was closed or why the terms of the account were made less favorable to you. This does not hold if these actions were taken because your account was delinquent or because you have not used the account for some time.

A Special Note To Women

A good credit history, a record of how you paid past bills, is often necessary to obtain credit. Unfortunately, this hurts many married, separated, divorced, and widowed women. There are two common reasons women do not have credit histories in their own names: they lost their credit histories when they married and changed their names; and creditors reported accounts shared by married couples in the husband's name only.

The law says that when creditors report histories to credit bureaus or to other creditors they must report information on accounts shared by married couples in both names. This is true only for accounts opened after June 1, 1977. If you and your spouse opened an account before that time, you should ask the creditor to use both names.

If you are married, divorced, separated, or widowed, you should make a special point to call or visit your local credit bureau(s) to ensure that all relevant information is in a file under your own name. To learn more about building your credit file, send for the free brochure, Women and Credit Histories, by writing: Public Reference, Federal Trade Commission, Washington, D.C. 20580. You also can write to this address for a free copy of Best Sellers, which lists all the FTC's consumer information publications.

What You Can Do If You Suspect Discrimination...

Complain to the creditor. Make it known that you are aware of the law. The creditor may reverse the decision or detect an error.

Many states have their own equal credit opportunity laws. Check with your state's Attorney General's office to see if the creditor violated state laws. Your state may decide to take the creditor to court.

Bring a case in Federal district court. If you win, you can recover your damages and be awarded a penalty. You can also recover reasonable attorney's fees and court costs. An attorney can advise you on how to proceed.

Join with others to file a class action suit. You may recover punitive damages for the class of up to $500,000 or 1% of the creditor's net worth, whichever is less.

Report violations to the appropriate government agency. If you are denied credit, the creditor must give you the name and address of the agency to contact. While the agencies do not resolve individual complaints, they do use consumer comments to decide which companies to investigate. A list of agencies appears at the end of this brochure.

Where To Send Complaints and Questions

If a retail store, department store, small loan and finance company, mortgage company, oil company, public utility company, state credit union, government lending program, or travel and expense credit card company is involved, contact the Federal Trade Commission office nearest you:

FTC Headquarters Federal Trade Commission 6th & Pennsylvania Ave., N.W. Washington, D.C. 20580 (202) 326-2222 TDD (202) 326-2502

FTC Regional Offices 1718 Peachtree Street, N.W., Suite 1000 Atlanta, Georgia 30367 (404) 347-4836

101 Merrimac Street, Suite 810 Boston, Massachusetts 02114-4719 (617) 424-5960

55 East Monroe Street, Suite 1437 Chicago, Illinois 60603 (312) 353-4423

668 Euclid Avenue, Suite 520-A Cleveland, Ohio 44114 (216) 522-4207

100 N. Central Expressway, Suite 500 Dallas, Texas 75201 (214) 767-5501

1405 Curtis Street, Suite 2900 Denver, Colorado 80202-2393 (303) 844-2271

11000 Wilshire Boulevard, Suite 13209 Los Angeles, California 90024 (310) 575-7575

150 William Street, Suite 1300 New York, New York 10038 (212) 264-1207

901 Market Street, Suite 570 San Francisco, California 94104 (415) 744-7920

2806 Federal Building, 915 Second Avenue Seattle, Washington 98174 (206) 220-6363

If your complaint concerns a nationally-chartered bank (National or N.A. will be part of the name), write to:

Comptroller of the Currency Compliance Management Mail Stop 7-5 Washington, D.C. 20219

If your complaint concerns a state-chartered bank that is insured by the Federal Deposit Insurance Corporation but is not a member of the Federal Reserve System, write to:

Federal Deposit Insurance Corporation Washington, D.C. 20429

If your complaint concerns a federally-chartered or federally-insured savings and loan association, write to:

Office of Thrift Supervision Consumer Affairs Program Washington, D.C. 20552

If your complaint concerns a federally-chartered credit union, write to:

National Credit Union Administration Consumer Affairs Division Washington, D.C. 20456

Complaints against all kinds of creditors can be referred to:

Department of Justice Civil Rights Division Washington, D.C. 20530


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