United States
Hong KongECOA and the prohibited bases
The Equal Credit Opportunity Act prohibits discrimination on nine bases: race, color, religion, national origin, sex, marital status, age, receipt of public assistance, and exercising a right under the Consumer Credit Protection Act.
ECOA became law in 1974 and is implemented as Regulation B, at 12 CFR 1002.
It governs the credit decision itself rather than the disclosures around it, which is what distinguishes it from most of the rest of the syllabus.
The nine bases
- Race
- Color
- Religion
- National origin
- Sex
- Marital status
- Age, provided the applicant can enter a contract
- Receipt of income from a public assistance program
- Good-faith exercise of a right under the Consumer Credit Protection Act
Nine. Count them, because the count is asked.
The Fair Housing Act prohibits discrimination on seven bases including familial status and disability, which ECOA does not name. The two overlap and are not identical, and questions exploit the difference.
Where age is allowed to matter
In an empirically derived, demonstrably and statistically sound credit scoring system, age may be used as a predictive variable.
With one condition: an elderly applicant may not be assigned a negative factor. That is at 12 CFR 1002.6(b)(2), and it is a favorite question because it is the exception to an otherwise absolute rule.
Notice requirements
| Requirement | Deadline |
|---|---|
| Notify of action taken on a completed application | 30 days |
| Notify of the right to a copy of an appraisal | 3 business days after application |
| Deliver appraisal copies | Promptly on completion, or 3 business days before consummation, whichever is earlier |
Adverse action
Where an application is refused, the notice must state the specific reasons for the decision, or tell the applicant how to obtain them.
Vagueness is the violation. "You did not meet our criteria" is not a reason, and a notice offering only that fails the requirement.
Common questions
What are the ECOA prohibited bases?
Race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, and the good-faith exercise of a right under the Consumer Credit Protection Act.
How many prohibited bases are there under ECOA?
Nine.
Can age be used in a credit decision?
Only in an empirically derived, statistically sound scoring system, and an elderly applicant may not be given a negative factor.
How long does a creditor have to notify of a decision?
30 days after receiving a completed application.
Is the ECOA list the same as the Fair Housing Act list?
No. The Fair Housing Act names seven bases including familial status and disability, which ECOA does not.