The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Equal Credit Opportunity Act (ECOA). This act prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, or because you receive public assistance. Here, we detail your equal credit opportunity rights when applying for credit during a divorce.
Who Does the ECOA Protect You Against?
The ECOA provides protections when dealing with any organization or person who regularly extends credit. This includes:
- Banks
- Small loan and finance companies
- Retail and department stores
- Credit card companies
- Credit unions
Everyone involved in the decision to grant credit or set the terms of that credit must comply with the ECOA.
What Creditors Cannot Do When You Apply for Credit
Creditors may not:
- Discourage you from applying or reject your application due to your race, color, religion, national origin, sex, marital status, age, or public assistance status.
- Impose different terms or conditions, like a higher interest rate or fees, based on your race, color, religion, national origin, sex, marital status, age, or public assistance status.
- Ask if you’re widowed or divorced. They can only use terms like married, unmarried, or separated.
- Ask about your marital status if you’re applying for a separate, unsecured account, unless you live in “community property” states or apply for a joint account or one secured by property.
- Ask for information about your spouse, except in specific situations such as if your spouse is applying with you, will be allowed to use the account, or if you’re relying on your spouse’s income or alimony/child support from a former spouse.
- Ask if you receive alimony, child support, or separate maintenance payments unless they tell you that you don’t need to provide this information if you’re not relying on it to get credit. They can ask if you have to pay such obligations.
Special Note to Women on Maintaining Credit History
A good credit history is often necessary to get credit, which can be challenging for many married, separated, divorced, and widowed women. Typically, women may not have credit histories in their own names because they lost their credit histories upon marriage and name change or creditors reported accounts in the husband’s name only.
If you’re married, separated, divorced, or widowed, contact your local credit reporting companies to ensure all relevant bill payment information is in a file under your name.
National credit reporting companies sell your report information to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.
Taking Action if Your Equal Credit Opportunity Rights Are Violated
If you suspect a creditor has discriminated against you:
- Complain to the creditor.
- Check with your state Attorney General’s Office to see if the creditor violated state equal credit opportunity laws.
- Report violations to the appropriate government agency. If you’ve been denied credit, the creditor must provide the name and address of the agency to contact.
Importance of a Certified Divorce Lending Professional (CDLP®)
Involving a Certified Divorce Lending Professional (CDLP®) early in the divorce settlement agreement can help divorcing homeowners set the stage for successful mortgage financing in the future.
Role of a CDLP® in Divorce Mortgage Planning
Divorce Mortgage Planning involves evaluating your mortgage options within the context of your overall financial objectives during your divorce. Working directly with your divorce team, a CDLP® understands the intersection of divorce, tax, real estate, and mortgage financing. The CDLP® helps you integrate the mortgage you select into your long and short-term financial and investment goals, minimize taxes, reduce interest expenses, and maximize cash flow.
This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations. The information contained in this newsletter has been prepared by, or purchased from, an independent third party and is distributed for consumer education purposes.
Copyright 2021—All Rights Divorce Lending Association
