Credit Discrimination: What Are Your Rights?

You probably already know that discrimination takes place. When it does, it might be because of gender, sexuality, religion, race, or something else. Did you know there’s such a thing as credit discrimination, though? 

For instance, maybe when a car dealership sees your credit score, they will not be willing to do business with you. If that happens, you might visit one of the bad credit car dealerships, Salt Lake City residents. There, you may be able to come to terms on a vehicle. 

Sometimes, though, finding a way around credit discrimination can be more difficult. It’s worth talking about this subject in more detail. In this article, we will cover what credit discrimination is and what rights you have if you believe it has happened to you.

What Exactly Does the Term “Credit Discrimination” Mean?

Credit discrimination takes place when a creditor such as a mortgage company or a bank decides not to lend you money based on what the government considers to be a protected trait.

That might be something like nationality, gender, race, etc. You might also hear the term “lending discrimination” instead. It’s the same thing.

Is This Legal to Do?

Credit discrimination is not legal. The Equal Credit Opportunity Act is supposed to prevent it from happening.

When credit discrimination occurs, it can prevent someone from buying a car, purchasing a home, and so forth. 

What Are Some Examples?

If a credit union looks at someone’s national origin and denies them a loan based on that, this is credit discrimination. If a finance company comes up with different conditions for a loan based on an applicant’s religion, that would also be an example.

A third one would be if a bank denied a woman of color a credit application, even if she has the same credit score as a white man. 

How Can You Know When It Is Happening to You?

There are normally certain ways you can tell if a lending entity is discriminating against you. They might offer you credit at a higher rate than others for no reason that they can readily explain.

They may also refuse you credit entirely, even if you meet all of the qualifications that this entity has advertised in TV commercials or radio spots. 

However, while these examples might make it seem like it is easy to tell when a lending entity is illegally discriminating against you, it is sometimes more difficult than you might imagine.

You may strongly suspect that is what’s happening, but there might not be any immediately available proof that you can use to bring legal action against this entity. 

Lenders often make decisions regarding who they are going to lend money to behind closed doors. Even if you know what you’re looking for, these companies and the individuals who represent them might try to confuse you with a torrent of legal language. They might try to make it sound like they have a legitimate reason for denying you credit, even if it sounds implausible to you. 

The reality is that if you’re not an expert in the lending field, you might not be able to tell whether the reason a lending entity gave you for denying you credit is legal or not.

Even if you have a feeling that they denied you credit based on one of the protected statuses that we mentioned, you might not have the abundance of physical evidence that would be necessary to pursue the matter in court.

In these instances, it will be necessary to consult with a lawyer who knows about these situations. 

When Can You Pursue Legal Action?

You always have the option of retaining a lawyer and suing a lending entity like a credit union or bank if you feel like you have been discriminated against. However, unless there is physical evidence that proves it, your lawsuit probably won’t get far. 

If a loan officer says that they don’t offer credit to women of color, for instance, and you then bring a civil action against that individual or lending entity, it seems fairly obvious that you would win your case.

However, what if nobody else heard this person say that to you? Even if they’re under oath, they might lie. That’s why you will probably need a paper trail to win this sort of civil action.

What Else Can You Do?

Regardless of whether you decide to sue the individual or entity who you believe discriminated against you, there are still steps you can take that make sense.

Documenting what happened can be a good place to start. Write down what happened, where, at what time, who was involved, etc. If there are any related documents or emails, save those.

You can also talk to a manager of one of the higher-ups at the bank, credit union, or whatever other business you feel discriminated against you. Let them know what happened and see how they respond. Write that down as well. 

Next, you can file a complaint with The Consumer Financial Protection Bureau. This entity exists to help with these kinds of cases, so it’s best you bring them into the situation and get their advice. If the entity that denied you credit has a history of doing this kind of thing, that might be a point in your favor if you eventually decide to sue them. 

While there’s no guarantee of what might happen if you lodge a complaint or hire a lawyer, it should at least make you feel that you have taken some action.

Maybe you’re incensed by what occurred, and you feel you have enough evidence to bring a meaningful civil case against the entity that discriminated against you. 

If so, then you may be able to walk away from a court battle with a judgment in your favor. That can translate to a cash payout that will not just make you feel better about the situation.

It will also teach the entity that discriminated against you a valuable lesson.