Equal Credit Opportunity Act
By Kristi Vaughan
If you've never had a job, never had a bank account and never had a loan, you might understand why you don't have a credit history. But what about the non-working spouse who (and yes, these days this is rare) has never had a personal bank account, department store charge or student loan? Or the older person who has paid for everything with cash?
Thanks to the federal Equal Credit Opportunity Act (ECOA) you cannot be denied credit simply because of age, sex, race, national origin or marital status.
The issue of equal credit opportunity arose several decades ago when women began entering the workforce in great numbers and found that despite their earnings they were being denied credit in their own name. In many cases they needed a male cosigner before they could get loans or credit cards. That changed in 1973 when the Equal Credit Opportunity Act passed the U.S. Senate and U.S. House of Representatives and was enacted in October 1974.
The act first banned discrimination in credit access on the basis of sex or marital status and was later amended to include race, religion, national origin and age. As a result of the ECOA a creditor may not:
- Discount income because of sex or marital status
- Refuse to consider regular alimony and child support
- Consider the race of people in the neighborhood where you want to buy a house
- Consider whether a phone is listed in your name.
The ECOA is credited, among other things, with helping women start businesses and take out mortgages in their own names.
Getting Credit in Your Name
Creditworthiness is the main criteria for establishing credit. If you pay for everything in cash or have never had a checking account or charge card in your own name, this can be difficult to show. Fortunately, as a result of the ECOA, any accounts that you have held jointly with someone else can count toward your credit history. It is best if your name is actually on the account but even if it isn't, you can offer documentation that you paid the bills or otherwise managed the credit.
A more straightforward way of gaining creditworthiness is to open accounts. Start small - maybe a checking account or a credit line at a local store. As you demonstrate your ability to manage this credit you can apply for greater degrees of credit.
Just remember, as easily as credit can be gained, it can be lost so manage it wisely!
