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Credit Denial

The Equal Credit Opportunity Act (ECOA) ensures that all consumers will be given an equal chance to receive credit. The ECOA states that it is illegal to discriminate against applicants on the basis of:

  • Sex
  • Marital status
  • Race
  • National origin
  • Religion
  • Age
  • Because they receive public assistance income

This doesn’t mean that all consumers who apply for credit will get it. Creditors may still use factors such as income, expense, debts and credit history to evaluate applicants, but they cannot discourage anyone from applying for credit.

Creditors may not:

  • Ask about your plans for having or raising children or if you receive child support or other maintenance (formerly called alimony) payments unless you are first told that you don’t have to reveal that information if you won’t rely on that income to repay the debt. However they may ask if you are obligated to pay child support or other maintenance because your ability to repay credit debts may be impaired by those commitments.
  • Consider the race of people who live in the neighborhood where you want to buy or improve a house with borrowed money.
  • Consider whether you have a telephone listed in your name. They may, however, consider whether there is a phone in your home.

Creditors may not consider your age unless:

  • You are a minor.
  • The creditor’s scoring system will treat an applicant who is 62 or older at least as favorably as anyone under 62.
  • Your age would affect your credit worthiness, such as a decreased income due to upcoming retirement.

When evaluating your income a creditor may not:

  • Refuse to consider reliable public assistance income in the same manner they would consider other income.
  • Discount income because of your sex or marital status (such as scoring a man’s income as 100% and a woman’s as 75%).
  • Assume that a woman of child-bearing age will stop working to raise children.
  • Discount or refuse to consider income because it is derived from part-time employment or from pension, annuity, retirement benefits.
  • Refuse to consider consistently–received child support or separate maintenance payments; however, they can ask you for proof that this income has been received consistently.

Under the ECOA, you have the right:

  • To know whether your credit application has been accepted or denied within 30 days of filing it.
  • To know the reasons for a rejected application. The creditor must either give you the specific reasons for the rejection or tell you of your right to learn the reason if you ask them within 60 days. Acceptable reasons are: "your income is too low" or "you haven’t been employed long enough." Unacceptable reasons are: "you didn’t meet our minimum standards" or "you didn’t receive enough points on our credit scoring system." Indefinite or vague reasons are illegal.
  • To receive a specific explanation of why you were offered less favorable terms than you applied for, such as higher finance charges or less money than you requested. However, this does not apply if you accept the less favorable terms by signing a contract.
  • To have credit in your birth name, your first name and your spouse’s last name, or your first name and a combined or hyphenated last name. Make sure, however, that the name on your credit report is consistent with the name under which you apply for credit.
  • To keep your own accounts after you change your name, marital status, reach a certain age, or retire unless the creditor has evidence that you are unwilling or unable to repay.
  • To get credit without a co-signer if you personally meet credit worthiness standards and to have a co-signer other than your spouse, if one is necessary.
  • To receive an explanation as to why your account was closed or why the terms of your account were changed. Wisconsin law requires a creditor to notify the customer of adverse changes to a consumer account in writing not less than 90 days before the terms of the account will change.