What does the Equal Credit Opportunity Act prohibit?

• A. It is a United States law enacted in 1974 that prohibits creditors from discriminating against applicants on the basis of race, color, religion, national origin, sex, marital status or age.
• B. It requires lenders to disclose annual percentage rates and fees.
• C. It governs privacy from government searches of financial records.
• D. It sets interest rate limits on consumer credit.

Answer: (A)

The main idea this question tests is fair access to credit and protection from lending discrimination. The Equal Credit Opportunity Act makes it illegal for creditors to treat applicants differently in any aspect of a credit transaction because of protected characteristics such as race, color, religion, national origin, sex, marital status, or age, and it also covers other protected conditions like public assistance status. Enacted in 1974, ECOA applies to all types of credit—mortgages, auto loans, credit cards, personal loans—and helps ensure people can obtain credit on equal terms. Lenders must respond to applications within a reasonable time and, if credit is denied, provide a notice and, upon request, the reasons for denial. This focus on nondiscrimination is what makes the statement describing ECOA the best choice.

Disclosures of annual percentage rates and fees are mandated by the Truth in Lending Act, not ECOA. Privacy protections for financial records involve different laws, and ECOA does not set broad interest rate limits.