Absolutely. And they have to tell the truth as well.
Whenever you apply for credit – be it an automobile loan, a credit card, a home mortgage, refinance, or any other sort of credit, the Equal Credit Opportunity Act requires the lender to do two things:
1) they must notify you of their decision on your credit application within 30 days, and
2) if you were denied, they must tell you the reason why.
The Equal Credit Opportunity Act was initially intended to prevent unfair lending discrimination. By requiring lenders to tell applicants why they were denied, it became much harder for discrimination to occur. But you don’t have to be part of any particular race, religion, or class to be protected by ECOA. You are entitled to notice of a decision within 30 days and an explanation of the reason why. If your credit application is granted, then great, you’re free to accept their loan. If your credit application is denied, or they offer you worse terms than you applied for, then this is called an “adverse action” and they have to give you a written notice. If a denial was based on your credit report, then they must tell you where they got that credit report. You are entitled to request a free copy of that credit report from the person or company who supplied it to them. If you are ever denied credit, I strongly suggest that you do this.
Sometimes, lenders do discriminate. Even if they don’t intend to be mean to any particular class, they may have policies in place that tend to disadvantage certain groups of people. That is illegal. And if it’s happening, you can do something about it.
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