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Equal Credit Opportunity Act: What to Know When Applying for Credit

March 21, 2012 | Comments: 0 | Views: 129

The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of marital status, color, age, race, religion, sex, national origin, or public assistance. Credit pay is mainly used to pay for education, a house, loan fund, and remodeling job or car. The nation's consumer protection agency, Federal Trade Commission (FTC), implements the ECOA. Hence, this Act also serves as one of the California labor laws.

Similar with other applications for benefits, application to get credit pay is also rigid as there are a lot of factors creditors have to consider in determining one's creditworthiness. These are:

- Expenses - Income - Debts - Credit history

Everyone who joins the decision-making whether or not to grant credit or just settling the conditions of credit, as well as real estate brokers who organize the finance, must conform to the ECOA. For the most part, the law takes into effect when an applicant deals with organizations or individuals who frequently expand credit such as:

- Retail and department stores - Credit unions - Banks - Credit card companies - Small loan and finance companies

Meanwhile, here are the things that applicants must know when applying for credit opportunity:

1. Creditors may discourage applicants from applying. They may also deny an application because of the applicant's color, race, marital status, national origin, age, religion, sex, public assistance.

2. Creditors may implement various terms or conditions such as a higher interest rate or higher fees on loan based on the applicant's religion, color, race, age, marital status, sex, or public assistance.

3. Creditors may ask if you are divorced or widowed. A creditor may only use the terms separated, married, or unmarried.

4. Creditors may ask about applicants' marital status if applying for a separate and unsecured or joint account. They may also ask applicants to provide information if they live in "community property" states such as:

- Arizona - California - Idaho - Louisiana - Nevada - New Mexico - Texas - Washington - Wisconsin

5. Creditors may ask information about an applicant's spouse, except:

- If the spouse is applying with the applicant - If the spouse will be allowed to use the account - If the applicant is depending on the spouse's salary or on allowance or child support income from a former spouse - If the applicant lives in a "community property" state

6. Creditors may ask your plans for raising or having children. Also, they may ask about expenses related to the applicant's dependents.

7. Creditors may ask if you get allowance, separate maintenance payments, or child support, except for cases that you tell them first that you don't have to provide such information if you are not dependent on these payments to get credit.

Federal employment laws must be known and understood by both employers and employees. These acts are important facets of employment as they provide protection and present constant vital reminders that discrimination or any conduct that connotes similar outcome should not in any way become evident in the workplace.

Jester Maru used to write several articles for a Law Group in Los Angeles, California. He personally loves writing articles on the topic racial discrimination in the workplace and wrongful termination California.

Source: EzineArticles
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