Protecting Yourself from Credit Discrimination

Think credit discrimination is a thing of the past? Think again – it’s alive and well and unfortunately, there are many who don’t know it when they see it. We checked with the Consumer Financial Protection Bureau to see just what credit discrimination looks like in the 21st century. In short, credit discrimination is any method used to prevent access to credit or putting roadblocks in place to ensure it’s out of reach for a borrower.

Equal Credit Opportunity Act

Whether it’s an application for a student loan, a mortgage or a new credit card account, Americans are assured of the rights and opportunities to purse those financial products. The one that directly addresses discrimination is the Equal Credit Opportunity Act and it makes it illegal for any creditor to discriminate in any aspect of a credit transaction based on certain characteristics. Whether it’s sabotaging a credit application or applying unrealistic stipulations – it’s all considered discrimination. Another law, the Fair Housing Act makes discrimination practices in home financing illegal.

Specific examples of credit discrimination include:

  • Refusing to extend credit if a consumer qualifies for it
  • Attempts to dissuade you or scare you away from applying for any kind of financial product, including student loans and credit cards
  • Provide offers to you that come with fees no one except the lender knows about or on terms that are less favorable or different than what’s offered another applicant with the same circumstances
  • Illegally close your account

Not only that but your race, religion, national origin, sexual and/or marital status, age, public assistance, or “exercising in good faith your rights under the Consumer Credit Protection Act” are all off limits as well.

Red Flags

The CFPB also reminds consumers that credit discrimination isn’t always obvious; in fact, it can be difficult to discern. Still, the consumer watchdog agency encourages consumers to pay attention to these red flags:

  • You notice a difference in how you are treated in person than what you are over the phone.
  • A lender attempts to discourage you from applying for a financial product such as a loan or credit card.
  • You overhear conversations by your lender who’s making insulting remarks about race, sex or other protected groups.
  • Those comments don’t necessarily have to be directed to you, either.
  • You are denied credit even when you’re sure you’re more than qualified.
  • You notice a high APR associated with your credit card and you know that you don’t pay that with your other cards.
  • A lender declines to extend credit though you never receive any kind of notification that provides the justification for that denial.
  • You feel as though you’re being patronized simply for asking for clarification or an explanation about your loan. Same thing applies if you feel as though you’re being pushed into signing paperwork.

One of the goals of the Consumer Financial Protection Bureau is to protect consumers from illegal tactics of creditors. Whether it’s discrimination or realizing you’ve been hit with an APR increase without sufficient notice, CFPB is tasked with hearing your concerns and then ensuring the creditors are in line with the different financial laws. If you believe you have been a victim of financial discrimination, CFPB encourages you to file a complaint with the agency. A spokesperson assures consumers that,

We’ll provide you a way to monitor the status and progress of your complaint.

CFPB Encourages Feedback

In fact, the CFPB wants to hear from consumers. As the spokesperson explains, consumers are encouraged to help the bureau help them and says they

can help us protect consumers and create a fairer marketplace even if they don’t want to file a complaint…tell us about your experience.

But what if you’re just wondering if you’re doing everything you can to protect your credit, your finances and your family? The CFPB offers these suggestions –

The first best thing any consumer can do is stay on top of his credit report. This can provide insight into why lenders offer or decline to offer any financial products. Be sure you have no errors in your credit file. Remember, too, that you need to request copies from all three credit bureaus – Experian, Equifax and Transunion.

Be sure you understand the minimum approval requirements before you apply for a car loan or credit card.

Due diligence is always recommended as well. A bit of time spent researching your options can save hundreds or even thousands of dollars over the life of any loan. Consider asking those you trust what their experiences are, too.

Too many times, consumers, out of fears that they will sound uneducated, will refrain from asking questions. Don’t do that – ask those tough questions. Remember, you’re working as your own advocate and it’s up to you to ensure you understand your responsibilities as well as the bank or other lender must adhere to their own compliance guidelines. Don’t be intimidated and don’t settle if something is still not clear.

Remember too that you are in control. You are the one who determines how quickly or slowly you move in signing on the dotted line. CFPB even says that walking away and then continuing the discussion later is perfectly acceptable.

CFPB and its Powers

Finally, don’t underestimate the power of the CFPB. As the website explains, the

CFPB is unique among financial regulators. Other regulators focus on the safety and soundness of the financial institutions first. The CFPB is the first to focus primarily on the American consumer.

It can’t do its job if it doesn’t know there’s a problem. There have been big changes in the financial industry, too. Several new laws in recent years have changed the way we see our financial outlooks. Because of those new laws, creditors are now being held to higher standards – and they’re all designed to protect the American consumer.

Have you been discriminated against in the past? Where did you turn for assistance or did you handle it on your own? Share your story with us – we want to hear from you too.

Similar News

No Comments »

Leave a comment