how the equal credit opportunity act ecoa works
the equal credit opportunity act was enacted in 1974 and is detailed in title 15 of the united states code 5 the act as implemented by regulation b states that individuals applying for loans and other credit can be evaluated only using factors directly related to their creditworthiness it prohibits creditors and lenders from considering factors that are unrelated to creditworthiness specifically the following protected classes in 2021 the consumer financial protection bureau clarified that the prohibition against sex discrimination in ecoa and regulation b encompasses sexual orientation discrimination and gender identity discrimination including discrimination based on an applicant s nonconformity with sex based or gender based stereotypes 7ecoa prohibits discrimination in all aspects of a credit transaction and applies to any organization that extends credit including banks small loan and finance companies retail stores credit card companies and credit unions it also applies to anyone involved in the decision to grant credit or set credit terms ecoa covers various types of credit including personal loans credit cards home loans student loans car loans small business loans and loan modifications and it s not limited to just consumer loans ecoa applies to any extension of credit including those made to small businesses corporations partnerships and trusts 8special considerations