What does the Equal Credit Opportunity Act prohibit?

The Equal Credit Opportunity Act (ECOA) is a federal law designed to promote fair lending practices and ensure that all individuals have equal access to credit. By focusing on its core purpose, the ECOA specifically prohibits discrimination in lending based on various characteristics, including race, color, religion, national origin, sex, marital status, and age, as well as because of the applicant's receipt of public assistance income.

This law is critical because it aims to eliminate biases that could affect a lender’s decision-making process, ensuring that borrowers are treated equitably regardless of their personal circumstances. By prohibiting discrimination, it fosters an inclusive environment for all consumers seeking credit, which is essential for building wealth and supporting economic stability.

The other options, while related to aspects of real estate and lending, do not align with the specific provisions of the ECOA. The law does not set interest rates, regulate public auctions, or impose restrictions on foreclosure processes. Instead, its singular focus is on eliminating discrimination, allowing for a more fair and equitable lending landscape.