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Gerri Willis Commentary:
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Protect yourself from credit discrimination

Make sure that your application for credit is not rejected for all the wrong reasons.

By Gerri Willis, CNN

NEW YORK (CNNMoney.com) -- We told you last week about a report by Genworth Financial that found a disproportionately large percentage of mortgages made to African American and Hispanic home buyers were high-cost subprime loans. Here's how you can protect yourself from credit discrimination.

1:You are protected

The Equal Credit Opportunity Act is in place to make sure all consumers are given an equal chance to obtain credit. This protects you when you deal with any creditor who regularly extends credit, including banks, retail and department stores, credit card companies, and credit unions.

This doesn't mean all consumers who apply for credit get it: Factors like income, expenses, debt, and credit history are considerations for creditworthiness.

2: Know the taboos

Under this law, you cannot be asked to give your gender, race, national origin or religion if you're applying for a loan. You can give this info voluntarily.

A creditor cannot ask if you're widowed or divorced. A creditor cannot ask if you plan on having children. You cannot be asked if you receive alimony or child support.

But, there are some legal questions you may be asked. For example, you may be asked about your residence or immigration status. You may also be asked if you have to pay alimony or child support.

3: Not for consideration

If you're on public assistance income or you have a pension or an annuity, this must be considered in the same way as other income. Alimony, child support, or separate maintenance payments should also be considered income.

In addition, it can't be assumed that a woman of childbearing age will stop working to raise children.

4: Get answers

You have the right to know why your application was rejected, but you must ask within 60 days. If you do, the creditor must give you a notice with specific reasons.

If you feel the loan terms were less favorable - say, you have higher finance charges than what you applied for, you have the right to find out why. But make sure you don't accept the offer first. If you do, you've relinquished this right.

Here are some acceptable reasons for a rejection, according to the Federal Trade Commission: "Your income was low," or "You haven't been employed long enough." Unacceptable reasons are: "You didn't meet our minimum standards." Don't settle for a vague reason. It's illegal. Make sure the creditor is specific.

5: Where to get help

If a retail store, department store, Credit Union, mortgage company, or government lending program is involved, contact the FTC's Consumer Response Center. If your complaint concerns a nationally-chartered bank, contact the Comptroller of the Currency at www.occ.treas.gov.

If your complaint concerns a state-chartered bank that is insured by the Federal Deposit Insurance Corporation, you'll want to get in touch with the Consumer Affairs division of the FDIC. That's at www.fdic.gov. If you're not sure who to complain to, go to the Civil Rights Division of the Department of Justice. That's at www.usdoj.gov.  Top of page

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