What does the Equal Credit Opportunity Act (ECOA) prohibit?

The Equal Credit Opportunity Act (ECOA) specifically prohibits discrimination in the extension of credit. This legislation is designed to ensure that all consumers have an equal opportunity to obtain credit without being subjected to unfair treatment based on characteristics such as race, color, religion, national origin, sex, marital status, age, or because they receive public assistance.

The ECOA covers various types of credit, including mortgages, credit cards, and other financial products, and prohibits lenders from using the aforementioned characteristics as a basis for denying credit or imposing unfavorable terms. This act plays a crucial role in promoting fairness and equality in the lending process, ensuring that consumers are judged by their creditworthiness rather than discriminatory factors.

While discrimination in property sales, rental agreements, and employment is addressed by other laws, such as the Fair Housing Act and Title VII of the Civil Rights Act, they are not the focus of the ECOA. The ECOA is distinctly centered on the lending process, making it clear why the correct interpretation of what it prohibits is related to credit extension.