Protecting Yourself From Credit Discrimination

Protecting Yourself From Credit Discrimination

Admittedly, a vast majority of people aren’t well-informed on credit and lending, which leads many astray, thinking that certain predatory practices are the norm in this field of work. As a result, plenty of people have become unknowing victims. And when they finally realize they’ve been cheated, they’ve already invested a lot of their hard-earned cash in mortgages and reoccurring monthly payments.

One of the most common predatory lending methods is credit discrimination, which refers to the unjust lending practices where lenders discriminate against borrowers based on their race, color, national origin, and the like. And to help put an end to this alarming issue, we’ll be discussing the ins and outs of credit discrimination and how you can protect yourself.

How Do You Know If It’s Happening To You?

Firstly, you need to assess the situation and find out whether you’re receiving equal treatment or not. Luckily, it’s relatively easy to spot these out, especially if lenders talk with disinterest and make racist remarks. So here are some of the things you need to watch out for:

#1 You’re Being Treated Differently

Number one, you’re outright being treated differently. One of the best ways to assess a situation is by comparing how they treated you on the phone versus how they’re treating you now in person. Most of the time, they can leave dead giveaways you can catch on to, but watch out for those lenders well-versed in these underhanded practices who will try to deceive you.

  • They Don’t Explain Why: If your lender refuses to answer your questions and avoids explanations, this is a clear sign of credit discrimination. Lenders are supposed to help borrowers make the best decision, and the last thing they’re meant to do is give you vague answers and leave you in the dark.
  • They Make Negative Comments: When a lender blatantly expresses disinterest and anger towards you or makes discriminatory comments against you, that is a dead giveaway of credit discrimination. These types of lenders will refuse to work with you and close their doors on any form of credit opportunity.

#2 They’re Pressuring You

Number two, if you’re lender is forcing you to sign or get into an unfavorable agreement, that is another case of credit discrimination. A lender is not supposed to overstep their boundaries. Their responsibilities start and end with informing you of all the credit options available to you, given your credit history.

  • Discouraging You From Borrowing: If a lender is talking down to you or preventing you from borrowing, this is a telltale sign of credit discrimination. It also works the other way around when they offer you agreements that seem too good to be true, which often have backhanded financial consequences hidden in the fine print.
  • Offering Unjust Credit With Higher Interest Rate: Another method of pressuring you is when they offer lousy credit options when you qualify for much better choices. What they’re trying to do is back you into a corner and force you to pay high-interest rates when you don’t have to.

Equal Credit Opportunity Act

According to the Equal Credit Opportunity Act, this law states that individuals applying for any form of loan can only be evaluated according to factors that directly involve their creditworthiness. Lenders are prohibited from assessing an individual based on their race, sex, religion, color, and other non-creditworthiness factors.

Essentially, the ECOA is the bread and butter of keeping you safe against credit discrimination. And, in cases where you’re looking to purchase a home, the Fair Housing Act also seeks to eliminate all forms of discrimination and ensure that everyone receives equal opportunity to buy a house. So, keep these two laws in mind the next time you decide to get a mortgage or apply for a loan.

Extra Precautionary Measures

money and contract

Likewise, staying informed is not the end of it because predatory lenders will always find a way to cheat you when you least expect it. So, on top of staying informed, here are some extra precautionary measures we advise you to take to increase your safety:

#1 Do Your Research

You don’t want to rush in not knowing anything and without any clue on your credit history. So, do your part and research on the loans and features the lender offers, including a simple background check on your creditworthiness. When in doubt, don’t be afraid to consult a professional in legal matters and accounting services to ensure you have everything in check.

#2 File A Formal Complaint

Lastly, if the situation does turn dire, and you’ve recently found out that you’ve become a victim of credit discrimination, take the initiative to file a formal complaint. Of course, we advise that you sort this out with the creditor first and see if things can be sorted out in civil discourse. However, if the problem continues, submit your complaint to the Consumer Financial Protection Bureau and make a formal report on the lender’s violations.

You Deserve To Be Treated Equally

Credit and lending can be a tricky subject to learn, but always remember that you deserve to be treated equally, and the law agrees too. And if you think anyone else needs to read this, feel free to share these among your close friends and family to prevent credit discrimination from plaguing anyone.

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