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One of the best understood Chapters of the Consumer Credit Protection Act is the Equal Credit Opportunity Act (ECOA). The ECOA has been around for a very long time; and we know that it prohibits discrimination in the extension of credit based on race, color, religion, national origin, sex, marital status, age or if an individual receives public assistance. The law also prohibits discrimination against applicants who have pursued the enforcement of rights available under the Consumer Credit Protection Act. No surprises here.

A bill has been introduced into the 117th Congress to clarify that (i) sexual orientation, (ii) gender identity, and (iii) location based on zip code or census tract, are also protected classes under the ECOA. The bill as introduced in the House is H.R. 166—the Fair Lending for All Act. It is important to note that the bill purports to be “clarifying” legislation—meaning that the law is not being changed, but only explained.

I don’t think that any creditor’s credit application point scoring model takes into account sexual orientation and gender identity. However, existing point scoring models may take into account zip codes or census tracts. If so, and if this bill becomes law, such models will need to be modified to meet this clarified standard.

It is probable that some creditors’ current judgmental credit decisioning takes into account one or more of these three factors. If H.R. 166 becomes law, then clearly a negative consideration based upon these factors will have to be changed.

Most all creditors now have Compliance Manuals and Systems that address the various aspects of consumer lending. It is time to take a look at the ECOA chapter to see what your policy says with respect to sexual orientation, gender identity and zip code/census tract.