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Discrimination against women for credit cards
Both men and women are protected from discrimination based on gender or marital status. But many of the law's provisions were designed to stop particular abuses that generally made it difficult for women to get credit. For example, denying credit or offering less favorable credit terms based on the misperception that single women ignore their debts when they marry, or that a woman's income "doesn't count" because she'll stop work to have and raise children, is unlawful in credit transactions.
The general rule is that you may not be denied credit because you are a woman or because you are married, single, widowed, divorced, or separated. Here are some important protections:
Gender and Marital Status. Usually, creditors may not ask your gender on an application form (one exception is on a loan to buy or build a home). You do not have to use Miss, Mrs., or Ms. with your name on a credit application. But in some cases, a creditor may ask whether you are married, unmarried, or separated (unmarried includes single, divorced, and widowed).
Childbearing Plans. Creditors may not ask about your birth-control practices or your plans to have children, and they may not assume anything about those plans.
Income and Alimony. The creditor must count all of your income, even income from part-time employment. Child support and alimony payments are a source of income for many women. You don't have to disclose these kinds of income, but if you do, creditors must count them.
Telephones. Creditors may not consider whether you have a telephone listing in your name because this factor would discriminate against many married women. (However, you may be asked if there's a telephone in your home.)
A creditor may consider whether income is steady and reliable, so be prepared to show that you can count on uninterrupted income, particularly if the source is alimony payments or part-time wages.
Your Own Accounts. Many married women once were turned down for credit in their own name. Or a husband had to cosign an account-that is, agree to pay if the wife didn't-even when a wife made sufficient income to easily repay the loan. Single women couldn't get loans because they were thought to be somehow less reliable than other applicants. You now have the right to your own credit, based on your own credit records and earnings. Your own credit means a separate account or loan in your own name, not a joint account with your husband or a duplicate card on his account. Here are the rules:
• Creditors may not refuse to open an account because of your gender or marital status.
• You can choose to use your first name and maiden name (Mary Smith), your first name and husband's last name (Mary Jones), or a combined last name (Mary Smith-Jones).
• If you're creditworthy, a creditor may not ask your husband to cosign your account, with certain exceptions when property rights are involved.
• Creditors may not ask for information about your husband or ex-husband when you apply for your own credit based on your own income unless that income is alimony, child support, or separate maintenance payments from your spouse or former spouse.
This last rule, of course, does not apply if your husband is going to use your account or be responsible for paying your debts on the account or if you live in a community property state. (Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.)
Change in Marital Status. Married women have sometimes faced severe hardships when cut off from credit after their husbands died. Single women have had accounts closed when they married, and married women have had accounts closed after a divorce. The law says that creditors may not make you reapply for credit because you marry or become widowed or divorced. Nor may they close your account or change the terms of your account on these grounds. There must be some sign that your creditworthiness has changed. For example, creditors may ask you to reapply if you relied on your ex-husband's income to get credit in the first place.
Setting up your own account protects you by establishing your own history of how you handle debt. You can rely on this record if your financial situation changes if you become widowed or divorced. If you're getting married and plan to take your husband's surname, write to your creditors and tell them you want to keep a separate account.
If You're Turned Down
Remember, your gender or race may not be used to discourage you from applying for a loan. And creditors may not hold up or otherwise delay your application on those grounds. Under the Equal Credit Opportunity Act, you must be notified within 30 days after your application has been completed whether your loan has been approved or not. If credit is denied, this notice must be in writing, and it must explain the specific reasons that you were denied credit or tell you of your right to ask for an explanation. You have the same rights if an account you have had is closed.
If you are denied credit, be sure to find out why. Remember, you may have to ask the creditors for this explanation. It may be that the creditor thinks you have requested more money than you can repay on your income. It may be that you have not been employed or lived long enough in the community. You can discuss terms with the creditor and ways to improve your creditworthiness. The next section explains how to improve your ability to get credit.
If you think you have been discriminated against, cite the law to the creditor. If the creditor still says no without a satisfactory explanation, you may contact a federal enforcement agency for assistance (the federal agency you should contact should be included in the notice you receive from the creditor), or you may bring legal action, as described in the Filing A Credit Complaint section of this handbook.
Building a Good Record
On your first attempt to get credit, you may face a common frustration: sometimes it seems you have to already have credit to get credit. Some creditors will look only at your salary and job and the other financial information that you put on the application. But most also want to know about your track record in handling credit, namely, how reliably you've repaid past debts. They turn to the records kept by credit bureaus or credit-reporting agencies, whose business is to collect, store, and report information about borrowers that is routinely supplied by many lenders. These records include the amount of credit you have received and how faithfully you've repaid.
Here are several ways you can begin to build a good credit history:
• Open a checking account or a savings account or both. These do not begin your credit file but may be checked as evidence that you have money and know how to manage it. Cancelled checks can be used to show that you pay utilities or rent bills regularly, a sign of reliability.
• Apply for a department store credit card. Repaying credit card bills on time is a plus in credit histories.
• Ask whether you may deposit funds with a financial institution to serve as collateral for a credit card; some institutions will issue a credit card with a credit limit usually no greater than the amount on deposit.
• If you're new in town, write for a summary of any credit record kept by a credit bureau in your former town. (Ask the bank or department store in your old hometown for the name of the agency it reports to.)
• If you don't qualify on the basis of your own credit standing, offer to have someone cosign your application.
• If you're turned down, find out why and try to resolve any misunderstandings.
What Laws Apply?
The following laws can help you start your credit history and keep your record accurate:
The Equal Credit Opportunity Act gives women a way to start their own credit history and identity.
The Fair Credit Opportunity Act sets up a procedure for correcting mistakes on your credit record.
Credit Histories for Women
Under the Equal Credit Opportunity Act, reports to credit bureaus must be made in the names of both husband and wife if both use an account or are responsible for repaying the debt. Some women who are divorced or widowed may not have separate credit histories because their credit accounts were listed only in their husbands' names. But divorced and widowed women can still benefit from such a record. Under the Equal Credit Opportunity Act, creditors must consider the credit history of accounts women have held jointly with their husbands. Creditors must also look at the record of any account held only in the husband's name if a woman can show that it also reflects her own creditworthiness. If the record is unfavorable-for example, if an ex-husband is a bad credit risk-she can try to show that the record does not reflect her own creditworthiness. Remember that a wife may also open her own account to ensure starting her own credit history.
Example:
Mary Jones, when married to John Jones, always paid their credit card bills on time from their joint checking account. But the card was issued in John's name, and the credit bureau kept all records in John's name. Now Mary is a widow and wants to take out a new card, but she's told she has no credit history. To benefit from the good credit record already established in John's name, Mary should point out that she handled all accounts properly when she was married and that bills were paid by checks from their joint checking account.
Maintaining Complete and Accurate Credit Records
Mistakes on your credit record can cloud your credit future. Your credit rating is important, so be sure that credit-bureau records are complete and accurate. The Fair Credit Reporting Act says that you must be told what's in your credit file and have any errors corrected.
Negative Information. If a lender refuses you credit because of unfavorable information in your credit report, you have a right to get the name and address of the agency that keeps your report. Then, you may either request information from the credit bureau by mail or in person. You may not get an exact copy of the file, but you will learn what's in the report. The law also says that the credit bureau must help you interpret the data in the report because the raw data may take experience to analyze. If you're questioning a credit refusal made within the past 60 days, the bureau cannot charge a fee for giving you information.
If you notify the bureau about an error, generally the bureau must investigate and resolve the dispute within 30 days after receiving your notice. The bureau will contact the creditor who supplied the data and remove any information that is incomplete or inaccurate from your credit file. If you disagree with the findings, you can file a short statement (100 words) in your record, giving your side of the story. Future reports to creditors must include this statement or a summary of it.
Old Information. Sometimes credit information is too old to give a good picture of your financial reputation. There is a limit on how long certain information may be kept in your file:
• Bankruptcies must not be reported after 10 years. However, information about any bankruptcies at any time may be reported if you apply for life insurance with a face value over $150,000, for a job paying $75,000 or more, or for credit with a principal amount of $150,000 or more.
• Suits and judgments paid, tax liens, and most other kinds of unfavorable information must not be reported after 7 years.
Your credit record may not be given to anyone who does not have a legitimate business need for it. Stores to which you are applying for credit may examine your record; curious neighbors may not. Prospective employers may examine your record with your permission.
Billing Mistakes. In the next chapter, you will find the steps to take if there's an error on your bill. By following these steps, you can protect your credit rating.
The best way to maintain your credit standing is to repay all debts on time. But there may be complications. To protect your credit rating, you should learn how to correct mistakes and resolve misunderstandings.
When there's a problem, first try to deal directly with the creditor. Credit laws can help you settle your complaints without a hassle.
What Laws Apply?
The Fair Credit Billing Act sets up procedures requiring creditors to promptly credit your payments and correct billing mistakes and allows you to withhold payments on defective goods.
Truth In Lending gives you three days to change your mind about certain credit transactions that use your home as collateral; it also limits your risk on lost or stolen credit cards.
Billing Errors
The Fair Credit Billing Act requires creditors to correct errors promptly and without damage to your credit rating.
A Case of Error? The law defines a billing error as any charge
• for something you didn't buy or for a purchase by someone not authorized to use your account
• that is not properly identified on your bill or is for an amount different from the actual purchase price or was entered on a date different from the purchase date
• for something that you did not accept on delivery or that was not delivered according to agreement. Billing errors also include:
• errors in arithmetic
• failure to show a payment or other credit to your account
• failure to mail the bill to your current address, provided you told the creditor about an address change at least 20 days before the end of the billing period
• an item on your bill for which you need more information.
In Case of Error. If you think your bill is wrong, or want more information about it, follow these steps:
1. Notify the creditor in writing within 60 days after the first bill was mailed that showed the error. Be sure to write to the address the creditor lists for billing inquiries and to tell the creditor
• your name and account number
• that you believe the bill contains an error and why you believe it is wrong and
• the date and suspected amount of the error or the item that you want explained.
2. Pay all parts of the bill that are not in dispute. But while waiting for an answer, you do not have to pay the amount in question (the "disputed amount") or any minimum payments or finance charges that apply to it.
The creditor must acknowledge your letter within 30 days unless the problem can be resolved within that time. Within two billing periods, but in no case longer than 90 days, either your account must be corrected, or you must be told why the creditor believes that the bill is correct.
If the creditor made a mistake, you do not pay any finance charges on the disputed amount. Your account must be corrected, and you must be sent an explanation of any amount you still owe.
If no error is found, the creditor must send you an explanation of the reasons for that finding and promptly send a statement of what you owe, which may include any finance charges that have accumulated and any minimum payments you missed while you were questioning the bill. You then have the time usually given on your type of account to pay any balance.
3. If you still are not satisfied, you should notify the creditor in writing within the time allowed to pay your bill.
Getting Credit When You're Over 62
Credit is an important money management tool for both young and older consumers. Yet the elderly, particularly older women, may find it difficult to get credit.
If you're an older consumer who has paid with cash all your life, you may find it difficult to open a credit account. That's because you have "no credit history" of how you paid on credit. If your income has decreased, you may find it harder to get a loan because you have "insufficient income." Or, if your spouse dies, you may find creditors trying to close joint accounts. A "joint account" is one for which both spouses applied and signed the credit agreement.
Under the federal Equal Credit Opportunity Act (ECOA), it's against the law for a creditor to deny you credit or terminate existing credit simply because of your age. This brochure explains your rights and offers tips for applying for and maintaining credit.
Applying for Credit
Applying for credit used to mean asking your neighborhood banker for a loan. Now, with national credit cards and computerized applications, the day of personal evaluations may be over. Instead, computer evaluations look at, among other things, your income, payment history, credit card accounts, and any outstanding balances. Paying in cash and in full may be sound financial advice, but they won't give you a payment history that helps you get credit.
A major indicator of your ability to repay a loan is your current income. Those who consider income must include types of income that are likely to be received by older consumers. This includes salaries from part-time employment, Social Security, pensions, and other retirement benefits.
You also may want to tell creditors about assets or other sources of income, such as your home, additional real estate, savings and checking accounts, money market funds, certificates of deposit, and stocks and bonds.
If you're age 62 or over, you have certain other protections. You can't be denied credit because credit-related insurance is not available based on your age. Credit insurance pays off the creditor if you should die or become disabled.
On the other hand, a creditor can consider your age to:
• favor applicants who are age 62 or older.
• determine other elements of creditworthiness. For example, a creditor could consider whether you're close to retirement age and a lower income.
While a creditor cannot take your age directly into account, a creditor may consider age as it relates to certain elements of creditworthiness. If, for example, at the age of 70, you apply for a 30-year mortgage, a lender might be concerned that you may not live to repay the loan. However, if you apply for a shorter loan term, increase your down payment, or do both, you might satisfy the creditor's concerns.
Checking Your Credit History
A creditor will often check your credit history with a credit bureau. If you want to know what's in your credit file, contact the credit bureaus listed in the Yellow Pages under "credit" or "credit rating and reporting." Because more than one bureau may have a file on you, call each until you locate all the agencies maintaining your file. The three major national credit bureaus are:
• Equifax, P.O. Box 740241, Atlanta, GA 30374-0241; (800) 685-1111
• Experian (formerly TRW), P.O. Box 2104, Allen, TX 75013; (888) 397-3742
• Trans Union, P.O. Box 1000, Chester, PA 19022; (800) 916-8800
There's no charge for your report if a company takes adverse action against you-based on your credit report-such as denying your application for credit, insurance, employment, or rental housing and your request your report within 60 days of receiving the notice of the action. The notice will give you the name, address, and phone number of the credit bureau that supplied the information. In addition, you're entitled to one free report a year if you can prove that (1) you're unemployed and plan to look for a job within 60 days, (2) you're on welfare, or (3) your report is inaccurate because of fraud. Otherwise, a credit bureau may charge you up to $8 for a copy of your report.
You may find that your file doesn't list all of your credit accounts. That's because not all creditors report to credit bureaus. You may ask that additional accounts be reported to your file. Some bureaus may charge for this service.
Credit information about shared accounts should be reported in your name and your spouse's. If it's not, ask the creditor in writing to report the account in both names.
Establishing a Credit History
If you're denied a loan or credit card because you have no credit history, consider establishing one. The best way is to apply for a small line of credit from your bank or a credit card from a local department store. Make sure you list your best financial references. Make payments regularly and make certain the creditor reports your credit history to a credit bureau.
If Your Spouse Dies
Under the ECOA, a creditor cannot automatically close or change the terms of a joint account solely because of the death of your spouse. A creditor may ask you to update your application or reapply. This can happen if the account was originally based on all or part of your spouse's income and if the creditor has reason to believe your income alone cannot support the credit line.
After you submit a re-application, the creditor will determine whether to continue to extend you credit or change your credit limits. Your creditor must respond in writing within 30 days of receiving your application. During that time, you can continue to use your account with no new restrictions. If you're application is rejected, you must be given specific reasons, or told of your right to get this information.
These protections also apply when you retire, reach age 62 or older, or change your name or marital status.
Kinds of Accounts
It's important to know what kind of credit accounts you have, especially if your spouse dies. There are two types of accounts-individual and joint. You can permit authorized persons to use either type.
• An individual account is opened in one person's name and is based only on that person's income and assets.
If you're concerned about your credit status if your spouse should die, you may want to try to open one or more individual accounts in your name. That way, your credit status won't be affected.
When you're applying for individual credit, ask the creditor to consider the credit history of accounts reported in your spouse's or former spouse's name, as well as those reported in your name. The creditor must consider this information if you can prove it reflects positively and accurately on your ability to manage credit. For example, you may be able to show through canceled checks that you made payments on an account, even though it's listed in your spouse's name only.
• A joint account is opened in two people's names, often a husband and wife, and is based on the income and assets of both or either person. Both people are responsible for the debt.
Account "Users"
If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse's name as well as in yours (if the account was opened after June 1, 1977). A creditor also may report the credit history in the name of any other authorized user.
If You're Denied Credit
The ECOA does not guarantee you'll get credit. But if you're denied credit, you have the right to know why. There may be an error or the computer system may not have evaluated all relevant information. In that case, you can ask the creditor to reconsider your application.
If you believe you've been discriminated against, you may want to write to the federal agency that regulates that particular creditor. Your complaint letter should state the facts. Send it, along with copies (NOT originals) of supporting documents. You also may want to contact an attorney. You have the right to sue a creditor who violates the ECOA.
National Banks:
Comptroller of the Currency
Compliance Management, Mail Stop 7-5
Washington, D.C. 20219
State Member Banks of the Reserve System:
Consumer and Community Affairs
Federal Reserve Board
20th & C Sts., N.W.
Washington, D.C. 20551
Federal Credit Unions:
National Credit Union Administration
1776 G St., N.W.
Washington, D.C. 20456
Non-Member Federally Insured Banks:
Office of Consumer Programs
Federal Deposit Insurance Corporation
550 Seventeenth St., N.W.
Washington, D.C. 20429
Federally Insured Savings and Loans, and Federally Chartered State Banks:
Consumer Affairs Program
Office of Thrift Supervision
1700 G St., N.W.
Washington, D.C. 20552
Other Creditors (includes retail, gasoline, finance, and mortgage companies):
Consumer Response Center
Federal Trade Commission
Washington, D.C. 20580
A Guide to Business Credit for Women, Minorities, and Small Businesses
The need for financing is a critical and perennial concern for the owners of small businesses. Indeed, few things are as crucial to the health of a small business operation. Many small businesses are launched by the personal resources of their owners. But they can quickly reach the stage where the owner must look to the credit market for financial help in expanding operations. The banking industry is an important source of working capital. However, entrepreneurs may not realize that applying for commercial credit is a more customized process than obtaining consumer credit, and requires a great deal of preparation by the business applicant. This brochure may help to de-mystify the process and improve your chances of getting the credit you need.
Types of Loans
Banks and other financial institutions can assist you by providing funds through personal or commercial credit. Examples of personal credit include automobile loans, credit cards, and home mortgages. Commercial credit includes business loans; here are some of the options:
Short-term loans are one of the most common types of business loans and are usually for less than one year. They can provide interim working capital for a business temporarily in need of cash, and are typically repaid in a lump sum when inventory or accounts receivable are converted into cash.
Intermediate-term loans are often used for a business start-up, the purchase of new equipment, expansion, or an increase in working capital. The maturity dates range from one to three years.
Long-term loans generally are made for major capital improvements, acquiring fixed assets, or business start-ups. The term of the loan runs for periods of three to five years and is usually based in part on the life of the asset financed. Repayment is usually made in monthly or quarterly installments.
A line of credit offers you the ability to borrow money repeatedly, up to your credit limit, without having to reapply. A line of credit is particularly important to businesses that experience seasonal fluctuations. The lender generally will perform a review once a year, at which time the borrower is asked to provide updated financial statements.
The Credit Application Process
Applying for commercial credit can be tedious. It calls for more documentation than you might initially have expected and certainly a lot more than when you apply for consumer credit. For lenders, extending credit to an entrepreneur usually means customizing the loan to suit the credit needs of that business. So don't be disheartened by the amount of paperwork needed to accompany the application. Instead, be prepared!
Among the best assets you can bring to the lender is a well thought-out and documented business proposal. You need to clearly state the purpose of the loan (will the money be used for temporary working capital, buying equipment, or expanding facilities); the amount of funds needed and for how long; and a repayment schedule. Your business proposal should include the following information:
Business description that tells the nature of the business, describes the product and its market, identifies its customers and competition.
Personal profile that outlines the background and experience of each of the principals in a resume.
Proposal that states the type of loan requested and its purpose.
Business plan that outlines your corporate strategy for the next three to five years; it will aid you and the lender in determining whether the business will generate the cash flow needed to repay the loan.
Repayment plan that tells how you propose to repay the loan or outlines a repayment schedule. The lender will be expecting you to repay the borrowed funds from the profits produced by the business. As a contingency, you might need to develop a plan on how you would repay the loan if the profits alone turned out to be inadequate.
Supporting documentation will include copies of pertinent papers that support the information contained in your loan proposal-for example, a lease, certificate of incorporation, partnership agreement, letters of reference, contracts, invoices or vendor quotes.
Collateral that you will use to secure the payment of the loan. Collateral can include business and personal assets such as inventory, equipment, and accounts receivable or real estate, stocks, bonds, and automobiles.
Financial statements, both personal and for the business. The business financial statement should be provided for the last three to five years of operation including a year-to-date interim report. It should contain a balance sheet showing business assets and liabilities, and a profit-and-loss statement showing revenues and expenses. The lender uses this information to calculate a debt-to-worth ratio for the business. Be prepared to provide copies of tax returns for the business for this same period.
The personal financial statement should list your assets and your liabilities. Identify the names in which title to each asset is held and its fair market value. You should be prepared to provide copies of your personal tax returns. You may be asked for a list of credit references. Lenders will check your personal as well as your business credit rating.
Lenders will carefully examine your financial statements and business projections. As a borrower, you must be fully prepared to answer questions about them.
Personal guarantees of the owners or other principals usually are required, even from an established business. The lender also may request another party's guarantee such as a cosigner or a surety, or may request a government guarantee from the U.S. Small Business Administration or other government agency.
In addition to the personal guarantee that you give, under the Equal Credit Opportunity Act the lender is allowed to require another person's guarantee should your application fail to meet the lender's standards of creditworthiness. If all or most of the assets listed on your personal financial statement are owned jointly with your spouse, or with someone else, the lender is likely to require such a guarantee. But the lender may not require that your spouse be the guarantor.
In the case of secured credit, the lender is allowed to obtain a spouse's or other co-owner's signature on certain documents when the applicant offers, as security for the loan, property that the two own jointly. In this case, the spouse or other co-owner may be asked to sign documents-such as a mortgage or other security agreement-that would be necessary under applicable state law to make the property available to satisfy the debt.
Sources of Technical Assistance
Before you approach a lender, you might want to seek the advice of another, more experienced "set of eyes" to review your business proposal, particularly if you are a first-time borrower. By doing so, you'd be getting the loan package in shape to make it easier for the lender to reach a favorable credit decision. There are some business support groups whose members could counsel you on how your package looks. A qualified counselor might even discover that you really don't need more money, and instead suggest better inventory control, improved marketing techniques, or other changes that could actually solve your growth problems. One source of counseling available to small businesses is the Service Corps of Retired Executives (SCORE), which is sponsored by the U.S. Small Business Administration. Others might include accountants and financial advisers.
Once you are satisfied that your proposal is in good shape to present to a lender, set up an appointment to discuss your application. You will find that the lender can also be an excellent source of business and financial counsel.
If your application is not approved
Most lenders, banks especially, are conservative in granting business loans. Given the obligation to their stockholders and depositors, they need to be sure there's a good chance the loans they make will be repaid.
If your application for credit is not approved, find out the reasons why. Some of the reasons that lenders often give for denying a business loan include, for example, insufficient owner's equity in the business; lack of an established earnings record; a history of slow or past-due trade or loan payments; or insufficient collateral. Finding out the reasons may help you qualify the next time you apply. The lender will keep you informed about the status of your application. If you are considered a "small business" (when your business revenues are $1 million or less, or when you are applying to start up a business), a lender has 30 days to let you know, either orally or in writing, whether or not you get the loan. The 30-day period begins after the lender has received all of the information needed to evaluate your credit request. If your application is denied, the lender must give you either:
• a written statement of the reasons for denial, or
• a written notice telling you of your right to obtain the reasons in writing. This notice may be given to you during the application process or at the time of the denial. The lender also will keep for one year the records relating to your application.
Different rules apply for larger businesses (those with more than $1 million in revenues). Within a reasonable period of time after getting all the necessary information on which to base a decision, the lender must decide and let you know whether or not you get the credit. Then you'll have 60 days in which to ask for a written statement of the reasons why you were denied credit; this is important to remember because the lender need not notify you of this right. The creditor will keep records of your application for at least 60 days after telling you of the credit decision. If within the 60 day period you request that records be kept longer, or ask for a written statement of the reasons for denial, records will be kept for one year.
Equal Credit Opportunity Act
Obtaining credit can be a difficult process for any business owner and especially for first-time borrowers. But keep in mind that different lenders have different standards; if you did not meet the standards of a particular institution, you may still qualify elsewhere. If you have a full understanding of why the initial lender didn't approve your application, with time and more attention to these areas, you can improve your proposal as a result and may succeed the next time you apply.
Women and minority applicants may be concerned that they have received less favorable treatment which is unrelated to their creditworthiness. All business applicants have certain protections against unlawful discrimination under the Equal Credit Opportunity Act. The Act makes it illegal for lenders to deny your loan application, discourage you from applying for a loan, or give you less favorable terms than another applicant because you are a woman or a minority group member.
Under the law, a lender may not take factors such as sex, race, national origin, or marital status into account.
In addition, the lender may not ask for information about your spouse unless your spouse has some connection to the business, or unless you are relying on your spouse's income to support your credit application or relying on alimony, child support, or separate maintenance payments to establish creditworthiness. But the lender may ask you for information about your spouse if you are living in, or you are relying for security on property located in, a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin).
Whether your business is large or small, if you are not granted the credit, be sure to discuss any questions you may have with the lender.
Further Help
If you are not granted credit by the lender and you believe the lender may have acted unlawfully, you can seek further assistance from the regulatory agency that supervises the institution. A list of some of the agencies is contained in this brochure for your reference. If it becomes necessary to seek legal assistance, the Act provides some remedies. If you have been denied credit because of unlawful discrimination and are able to prove it, courts may award actual damages and in some circumstances may impose punitive damages against the lender. If a lawsuit alleging discrimination is successful, the court also may award court costs and attorney fees.
Federal Enforcement Agencies
All creditors are subject to the Equal Credit Opportunity Act (ECOA) and Regulation B (issued by the Federal Reserve Board), which contains specific rules governing credit transactions. The following is a list of the federal agencies that enforce the ECOA and Regulation B for particular classes of financial institutions. Any questions concerning a particular financial institution should be directed to its enforcement agency.
State Member Banks of the Federal Reserve System
Division of Consumer and Community Affairs
Mail Stop 800
Board of Governors of the Federal Reserve System
20th & C Streets, N.W.
Washington, D.C. 20551
(202) 452-3693
www.federalreserve.gov
National Banks
Office of the Comptroller of the Currency
Consumer Asistance Unit
1301 McKinney Street
Suite 3710
Houston, Texas 77010
(800) 613-6743
www.occ.treas.gov
Non-Member Federally Insured Banks
Federal Deposit Insurance Corporation
Office of Compliance and Consumer Affairs
550 17th Street, N.W.
Room PA-1730, 7th Floor
Washington, D.C. 20429
(202) 942-3100 or
(800) 934-FDIC (934-3342)
www.fdic.gov
Savings and Loan Associations
Office of Thrift Supervision
Consumer Programs
1700 G Street, N.W., 6th Floor
Washington, D.C. 20552
(202) 906-6237 or
(800) 842-6929
www.ots.treas.gov
Federal Credit Unions
National Credit Union Administration
Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, Virginia 22314
(703) 518-6330
www.ncua.gov
Small Business Investment Companies
Consumer Affairs
Small Business Administration
409 Third Street, S.W.
Washington, D.C. 20416
(800) U-ASK-SBA (827-5722)
www.sba.gov
Other Lenders
Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
(202) 326-3758 or
(877) FTC-HELP-toll free (877-382-4357)
www.ftc.gov
Alternative Sources for Capital
The U.S. Small Business Administration (SBA), the federal agency created specifically to assist and counsel small businesses, suggests the following sources of capital in addition to banks:
Friends, Relatives, Individuals
Savings and Loan Associations
Insurance Companies
Finance Companies
Mortgage Companies
Small Business Investment Companies
Venture Capital Firms
State Government Financing Sources
Pension Funds
Government Agencies (such as SBA)
Private Foundations
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