ECOA & Regulation B: practice questions

Last year an applicant used his legal right to dispute a billing error on a credit card issued by the same lender. The lender now turns down his mortgage application for that reason. What does ECOA say?

1. It is allowed, since the dispute shows he is a risky borrower
2. It is allowed if the dispute was later decided against him
3. It is prohibited only if the dispute was made in writing
4. It is prohibited to deny credit for exercising that right ✓

Why: 15 U.S.C. 1691(a)(3) makes it unlawful to discriminate against an applicant "because the applicant has in good faith exercised any right under this chapter", meaning the Consumer Credit Protection Act, which includes the billing error rights. The outcome of a good-faith dispute does not matter.

Source: 15 U.S.C. 1691(a)(3)

Whom does Regulation B's discouragement rule protect?

1. Only applicants whose files are complete
2. Applicants and prospective applicants alike ✓
3. Only applicants the creditor has declined
4. Only existing customers of the creditor

Why: Amended 12 CFR 1002.4(b) covers statements "directed at applicants or prospective applicants". The official interpretation notes that although most of the regulation protects people who have applied for or received credit, this paragraph reaches prospective applicants, in keeping with the purpose of the Act (FR Doc. 2026-07804, Supplement I, comment 4(b)-1).

Source: 12 CFR 1002.4(b), as amended by FR Doc. 2026-07804

Which of these is NOT a prohibited basis for discrimination under the Equal Credit Opportunity Act?

1. The applicant's history of late payments ✓
2. The applicant's marital status
3. The applicant's public assistance income
4. The applicant's religion

Why: 15 U.S.C. 1691(a) makes it unlawful to discriminate on the basis of race, color, religion, national origin, sex, marital status or age (if the applicant can contract); because income derives from a public assistance program; or because the applicant has in good faith exercised a right under the Consumer Credit Protection Act. Payment history is a legitimate element of creditworthiness, not a prohibited basis.

Source: 15 U.S.C. 1691(a)

A married applicant qualifies on her own income and credit for the mortgage amount and terms she requests. The lender insists that her husband co-sign the note. What does Regulation B say?

1. The lender may not demand his signature ✓
2. The lender may require it, since she is married
3. The lender may require it if he lives in the home
4. The lender may require it for loans over $100,000

Why: 12 CFR 1002.7(d)(1) bars requiring the signature of an applicant's spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor's standards for the amount and terms requested. State property law may justify a spouse signing the security instrument in some cases (1002.7(d)(4)); it does not justify making him liable on the note.

Source: 12 CFR 1002.7(d)(1)

A loan officer asks a married applicant whether the couple plan to have children soon. What does Regulation B say?

1. It is allowed if asked of every married applicant
2. It is allowed to predict a possible loss of income
3. It is prohibited to ask about plans to bear children ✓
4. It is prohibited only if the answer is written down

Why: 12 CFR 1002.5(d)(3) forbids inquiring about birth control practices, intentions concerning the bearing or rearing of children, or capability to bear children. The creditor may ask the number and ages of dependents and about dependent-related obligations, asked without regard to sex or marital status. Section 1002.6(b)(3) also bars assuming a category of persons will have reduced income because of childbearing.

Source: 12 CFR 1002.5(d)(3), 1002.6(b)(3)

An applicant lists $1,200 a month of income on a mortgage application. When may the creditor ask whether any of it is alimony or child support?

1. Never, because the question is always prohibited
2. Only after saying it need not be revealed ✓
3. Whenever it likes, since income must be verified
4. Only if the applicant is currently unmarried

Why: 12 CFR 1002.5(d)(2) bars asking whether stated income comes from alimony, child support or separate maintenance unless the creditor discloses that such income need not be revealed if the applicant does not want it considered. If the applicant relies on it, 1002.6(b)(5) requires it to be counted to the extent it is likely to be consistently made.

Source: 12 CFR 1002.5(d)(2)

May a creditor ask about an applicant's permanent residency and immigration status under Regulation B?

1. No; both are prohibited bases under ECOA
2. Only if the applicant volunteers them
3. Only for loans above the conforming limit
4. Yes; both may be asked and considered ✓

Why: 12 CFR 1002.5(e) permits a creditor to inquire about the permanent residency and immigration status of an applicant or any other person in connection with a credit transaction, and 1002.6(b)(7) lets it consider that status and information needed to ascertain its rights and remedies regarding repayment. National origin, by contrast, remains a prohibited basis.

Source: 12 CFR 1002.5(e), 1002.6(b)(7)

A creditor uses an empirically derived, statistically sound credit scoring system that includes age as a variable. What limit does Regulation B place on how age is used?

1. Age may be used only for applicants under the age of 62
2. Age may be used only if the applicant gives written consent
3. Age may not be used at all in any credit scoring system
4. An elderly applicant's age may not be scored negatively ✓

Why: 12 CFR 1002.6(b)(2)(ii) permits such a system to use age as a predictive variable "provided that the age of an elderly applicant is not assigned a negative factor or value", mirroring 15 U.S.C. 1691(b)(3). Any system may use an elderly applicant's age to favor the applicant (1002.6(b)(2)(iv)).

Source: 12 CFR 1002.6(b)(2)(ii); 15 U.S.C. 1691(b)(3)