The United States Department of Justice (DoJ) and the Consumer Financial Protection Bureau (CFPB) have warned financial institutions against using immigration status to discriminate against credit applicants.
The agencies clarified that all credit applicants are protected from discrimination based on national origin, race, and other characteristics covered by the Equal Credit Opportunity Act (ECOA), regardless of their immigration status.
They stated that unnecessary or overbroad reliance on immigration status, when based on bias, may violate the law.
Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said “Lenders should not deny people the opportunity to take out a loan to buy a home, build their businesses or otherwise pursue their financial goals because of unlawful bias and without regard to their actual ability to repay.”
“This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law.” warned the federal prosecutor.
Joint DOJ/CFPB statement: “For example, if a creditor has a blanket policy of refusing to consider applications from certain groups of noncitizens regardless of the credit qualifications of individual borrowers within that group, that policy may risk violating ECOA and Regulation B. This risk could arise because some individuals within those groups may have sufficient credit scores or other individual circumstances that may resolve concerns about the creditor’s rights and remedies regarding repayment.”
“In addition, the overbroad consideration of certain criteria – such as how long a consumer has had a Social Security Number – may implicate or serve as a proxy for citizenship or immigration status, which in turn, may implicate a protected characteristic under ECOA like national origin or race.”
Some financial institutions have maintained blanket policies denying credit to individuals based on their immigration status, even when they have strong credit histories.
The CFPB provided an example of a couple in Texas who were denied a loan despite having high credit scores and good income because one of the applicants was an immigrant with protection under DACA.
The agencies emphasized that fair access to credit is important and that immigration status should not be used as an excuse for illegal discrimination.
CFPB Director Rohit Chopra has been clear on their position, stating “Fair access to credit is crucially important for building wealth and strengthening household financial stability.”
Adding, “The CFPB will not allow companies to use immigration status as an excuse for illegal discrimination.”