5 Questions Your Banker Can’t Ask

By Jill Terry

 In these days of online banking and faceless interactions, divulging only what’s absolutely necessary to your banker should be expected. But what is absolutely necessary? In other words, what are bankers, by law, forbidden to ask credit applicants?

The federal government enacted Regulation B, better known as the “Equal Credit Opportunity Act,” to combat unfair treatment reported by credit applicants when they applied for credit. The law prohibits a creditor from asking certain questions about you–questions that ultimately have nothing to do with your ability to repay a loan. Credit application forms usually comply with this law, but any time you have a conversation with a banker, make sure that he or she doesn’t ask about and you do not volunteer the following types of information.

Age
This is a tricky one. The bank can’t ask you how old you are, but the law permits a creditor to ask for your date of birth. What a banker must not do is make assumptions about how your age will affect your credit-worthiness. However, being old enough to execute a contract or a 75-year-old applying for a 20-year mortgage are legitimate considerations under the law.

Receipt of Public Assistance
You are required to disclose if you have received any public assistance monies only if you want that income considered as part of your application. And a bank cannot arbitrarily exclude these payments from your debt-to-income calculation unless it’s clear that these payments will not be consistently made or are scheduled to end soon.

Marital Status
There are only two situations in which marital status is a valid consideration in extending credit:

1. You apply for individual, unsecured credit (which you can do, even if you’re married) and you live in a community property state or are relying on property located in a community property state in order to pay off the loan.
2. You apply jointly with your spouse for any other kind of credit.

The credit application can inquire about your marital status, using only the terms “unmarried,” “married,” and “separated.” Banks are prohibited from using your marital status as a reason to approve or deny credit, but they may consider it in determining how you hold property and determining your debt.

Race, Color, Religion, National Origin
It is now common knowledge that these are criteria by which nobody should be judged, and the credit application process is certainly no exception. Beware of bankers who innocently ask your nationality, perhaps as part of a casual conversation. Don’t answer the question and report the banker’s action to his supervisor. If you’re applying for a mortgage, however, the bank is required to collect this information under another federal regulation in order for the bank to report whether or not it gave you credit and why.

Sex
Usually, your first name will reveal your gender, but not always. In any event, an applicant’s sex is irrelevant and should have no bearing on the bank’s decision whether to extend credit.

The Bottom Line
A bank should have a set of standards by which it measures the credit-worthiness of an applicant and none of the above should be included in the decision making process. If you suspect these prohibited subjects formed part of your bank’s decision to decline your loan application, you should contact the federal regulatory agency that regulates your bank.

For more information about Regulation B, visit the Federal Reserve Bank‘s Web site. For a list of available consumer protection publications, visit the Federal Reserve’s consumer information area.