Credit Discrimination

Credit discrimination is when a creditor considers factors such as race, color, religion, national origin, sex, sexual orientation, gender identity, marital status, age, and more when making a credit determination.

All credit applicants are protected from discrimination based on race or color, religion, national origin, sex, gender or sexual orientation, marital or familial status, age, disability, and public assistance status.

The Equal Credit Opportunity Act (ECOA) protects credit applicants from credit discrimination. The Fair Housing Act makes many discrimination practices in home financing illegal. And according to the National Consumer Law Center, the Home Mortgage Disclosure Act (HMDA), the Community Reinvestment Act (CRA), and various civil rights acts prohibit credit discrimination as well.

Under these laws, as well as Texas Finance Code 341.401, lenders are prohibited from discriminating based on:

• race,

• color,

• religion,

• national origin,

• sex,

• marital status, or

• age.

• Considering your race, color, religion, national origin, sex, marital status, or whether you get public assistance.
• Considering your age, unless:
  • you are too young to sign contracts, generally under 18;
  • you’re at least 62, and the creditor will favor you because of your age;
  • It is used to determine the meaning of other factors important to creditworthiness. For example, a creditor could use your age to determine if your income might drop because you are about to retire;
  • It is used in a valid credit scoring system that favors applicants 62 and older. A credit scoring system assigns points to answers you give on credit applications. For example, your length of employment might be scored differently depending on your age.
• Considering whether you have a telephone account in your name.
• A creditor may consider whether you have a phone.
• Considering the racial composition of the neighborhood where you want to buy, refinance or improve a house with money you are borrowing.

Yes, a creditor may not ask you the following:

• Questions about your race or national origin. However, a creditor may ask you about and consider your immigration status and whether you have the right to stay in the country long enough to repay the debt.
• Questions about your plans for having or raising children. However, they may ask questions about expenses related to your dependents.
• Questions about whether you receive alimony, child support, or separate maintenance payments unless they tell you first that you do not have to provide this information if you are not relying on these payments to get credit. However, they may ask if you must pay alimony, child support, or separate maintenance payments.
• Questions about your spouse, unless
  • Your spouse is applying for credit with you.
  • Your spouse will be allowed to use the account.
  • You are relying on your spouse’s income or alimony or child support income from a former spouse.
  • You live in a community property state.

Read this Federal Trade Commission article about credit discrimination from January 2022.

The National Consumer Law Center publication Credit Discrimination features an in-depth look at the topic.