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Simple English definitions for legal terms
Equal Credit Opportunity Act
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A quick definition of Equal Credit Opportunity Act:
The Equal Credit Opportunity Act is a law that says lenders cannot treat people unfairly when they apply for credit. They cannot say no to someone because of their race, color, religion, national origin, age, sex, or marital status. This law applies to all parts of the credit process.
A more thorough explanation:
The Equal Credit Opportunity Act (ECOA) is a federal law that prohibits creditors from discriminating against credit applicants based on certain characteristics. These characteristics include:
- Race
- Color
- Religion
- National origin
- Age
- Sex
- Marital status
For example, a creditor cannot deny someone a loan simply because they are a certain race or religion. They also cannot charge someone a higher interest rate based on their age or sex.
The ECOA applies to all aspects of a credit transaction, including:
- Applying for credit
- Qualifying for credit
- Setting the terms of credit
- Collecting on a debt
The purpose of the ECOA is to ensure that all individuals have equal access to credit and are not unfairly discriminated against based on certain characteristics.