Under ECOA, what actions are considered discriminatory?

Under the Equal Credit Opportunity Act (ECOA), discriminatory actions specifically refer to treating applicants unfairly based on certain protected characteristics, such as race, color, or national origin. The ECOA was established to ensure that all individuals have an equal chance to obtain credit without facing discrimination.

When a loan application is denied based on race, color, or national origin, it violates the principle of equal opportunity that ECOA upholds. Such actions not only contribute to systemic inequality but also directly contravene the legal protections afforded to individuals under this law. Therefore, denying loans on these bases is considered discriminatory and is strictly prohibited under the ECOA.

In contrast, actions such as denying loans based solely on credit score, income level, or employment history may have legitimate financial considerations and do not inherently demonstrate discrimination against protected classes under ECOA. These criteria can be used as objective measures of creditworthiness without the influence of bias against an individual's characteristics.