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Credit Discrimination: 3.4.1 Marital Status

Marital status is a prohibited basis under the Equal Credit Opportunity Act (ECOA)65 and many state credit discrimination and fair housing statutes.66 Generally, marital status as a prohibited basis includes any discrimination against an individual because that individual is single, divorced, separated, married, or widowed.

Credit Discrimination: 3.4.2 Age

The ECOA81 and a number of state credit discrimination laws82 list age as a prohibited basis. In practice, however, the ECOA mainly prohibits discrimination against older consumers.

Credit Discrimination: 3.4.3 Public Assistance Status

The ECOA lists as a prohibited basis for discrimination that “all or part of the applicant’s income derives from any public assistance program.”93 This is an important category of prohibited discrimination for low-income consumers. It is not found in the federal Fair Housing Act (FHA). It is sometimes found in state fair housing laws and infrequently found as a prohibited basis in state credit discrimination laws.94

Credit Discrimination: 3.4.4.1 General

A prohibited basis unique to the Equal Credit Opportunity Act (ECOA) is the applicant’s good faith exercise of federal Consumer Credit Protection Act (CCPA) rights.106 Only a few states have an analogous provision listing exercise of rights under state credit legislation as a prohibited basis.107 Also, the Fair Housing Act (FHA) prohibits retaliating against any person because that person has made a complaint, testified, assisted, or participated in any manner in a proceeding under the FHA.

Credit Discrimination: 3.4.4.3 “Good Faith” Exercise of Rights

The applicant is protected only when an exercise of rights under the Consumer Credit Protection Act (CCPA) was done in “good faith.”130 As the legislative history of the 1976 ECOA amendments explains, “[t]he ‘good faith’ qualification recognizes that some applicants may engage in frivolous or nuisance disputes which do reflect on their willingness to honor their obligations.”131

Credit Discrimination: 3.4.4.4 “Applicant” Must Exercise the Rights

The applicant must have exercised the Consumer Credit Protection Act (CCPA) rights. “Applicant” is a defined term under Regulation B and includes a credit applicant, one who has been extended credit, and a co-signer or other party who is contractually obligated on the loan.136 If any of these individuals had previously exercised CCPA rights, the creditor may not use that as a basis for discrimination.

Credit Discrimination: 3.5.1 Familial Status

The federal Fair Housing Act (FHA) lists familial status as a prohibited basis for credit discrimination,137 as do most state credit discrimination and housing financing statutes.138 Generally, this prohibition forbids creditors from discriminating on the basis that applicants have children (or do not have children), are pregnant, or are legal custodians of children.

Credit Discrimination: 3.5.2.1 General

The Fair Housing Act (FHA) and many state credit discrimination statutes147 directly prohibit credit discrimination based on an applicant’s status as disabled.148 The Americans with Disabilities Act (ADA)149 also prohibits discrimination by creditors on the basis of disability. However, the Equal Credit Opportunity Act (ECOA) does not provide for an individual’s disability as a protected basis.

Credit Discrimination: 3.5.2.2 Definition of Disability

Disability is defined in the FHA and in the ADA as a physical or mental impairment which substantially limits one or more major life activity, having a record of such impairment, or being considered as having such an impairment.150 It is not enough to have an impairment. The disability also must substantially limit one or more major life activity, such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working.151

Credit Discrimination: 3.5.2.3 Application of the Americans with Disabilities Act to Credit Transactions

The ADA can combat credit discrimination involving applicants with disabilities, especially for non-housing financing cases.155 Title III of the ADA prohibits discrimination by places of public accommodation on the basis of disability.156 Public accommodation is defined to include banks, retailers, and other service establishments.157 Thus, many creditors should be covered by the ADA because they constitute places of public accommodation.

Credit Discrimination: 3.6.1 Race and Ethnicity

Race is the sole prohibited basis under the federal Civil Rights Acts.188 One important issue in the definition of race under the federal Civil Rights Acts is whether racial discrimination includes discrimination against certain ethnic groups, such as Arabs, Jews, and Latinxs.

Credit Discrimination: 3.6.2 Citizenship Status

Only citizens are given the right to utilize section 1982, since the statutes state explicitly that “all citizens of the United States shall have the same right.” On the other hand, section 1981 states that “all persons within the jurisdiction of the United States shall have the same right to make and enforce contracts . . . as is enjoyed by white citizens.”196 Thus, a non-citizen can bring actions under that statute when that non-citizen does not have the same rights as White citizens.197

Credit Discrimination: 3.7.1 General

If discrimination does not involve one of these listed prohibited bases under the Equal Credit Opportunity Act (ECOA), the federal Fair Housing Act (FHA), the federal Civil Rights Acts, or a state’s general anti-discrimination statute, the consumer has three strategies to show such discrimination to be actionable. First, does the basis for credit discrimination have a disparate impact on a protected class?

Credit Discrimination: 3.7.2 Discrimination and the Digital Divide

A growing practice that is likely to have a disparate impact on protected classes is the offering of preferential or exclusive credit terms to consumers who apply online.221 Studies indicate lower access and use of the internet by various protected groups, such as African Americans, Hispanics, older citizens, people with disabilities, and those on public assistance.222 Therefore, a creditor who offers “internet-only” deals, or special discounts for applying online, is likely going to disproporti

Credit Discrimination: 3.8.1 General

The Equal Credit Opportunity Act (ECOA) and Regulation B set out a clearly delineated and limited exception to the general rule prohibiting discrimination on a prohibited basis, called special purpose credit programs.234 These programs may require that program participants share a common characteristic, such as race, national origin, or sex.235 For example, a special purpose credit program may be set up to assist individuals of color, women, or young applicants.

Credit Discrimination: 3.9.1 The General Rule Under the ECOA

Prohibited credit discrimination under the Equal Credit Opportunity Act (ECOA) may be based not only on the characteristics of the applicant but on the characteristics of the applicant’s business partners, its officers (in the case of a corporate applicant), and the individuals with whom the applicant affiliates or associates.262 Thus, the ECOA prevents discrimination in the offering of credit based on the race, religion, sex, or other characteristics of those with whom the applicant deals or of those who will benefit if the applicant obtains

Credit Discrimination: 3.9.2 Application of ECOA Rule to Public Assistance and to the Exercise of CCPA Rights

The general ECOA rule that a creditor may not discriminate against an applicant because of individuals the applicant associates with is at least true when the discrimination is based on the race, color, religion, national origin, sex, marital status, or age of those with whom the applicant deals.267 This “associational” protection should also extend to the remaining two protected ECOA categories—receipt of public assistance and good faith exercise of rights under the Consumer Credit Protection Act.

Credit Discrimination: 6.6.4 Marital Status

A creditor may not consider an applicant’s marital status to determine the applicant’s creditworthiness, except as otherwise permitted or required by law.308 In evaluating joint applications, a creditor cannot treat applicants differently based on the existence, absence, or likelihood of a marital relationship between the parties.309

Credit Discrimination: BOOKS

Chloe Thurston, At the Boundaries of Homeownership: Credit, Discrimination, and the American State (2018).

Dan Immergluck, Credit to the Community: Community Reinvestment and Fair Lending Policy in the United States (2004).

Discrimination in Financial Services: A Special Issue of the Journal of Financial Services Research (George J. Benston et al. eds., 1997).

Edward M. Gramlich, Subprime Mortgages: America’s Latest Boom and Bust (2007).

Gregory D. Squires & Charis E. Kubrin, Privileged Places: Race, Residence, and the Structure of Opportunity (2006).