Lending Discrimination: Something You Shouldn’t Ignore

Lending Discrimination has existed for a long time. There are records of discrimination back in the 1930s, in the United States, and is something that still continues. This is a practice known as “red marking”, when banks deny the provision of services on racial or ethnic grounds, either through an argument that is offered as an excuse not to provide it or through a price increase.

In the United States, there has been a law since 1948 that protects people from discrimination and racial acts when they are looking for a rental home or a loan. This law prohibits discrimination on the basis of race, sex, national origin, disability, or familial status when this person is involved in a residential real estate transaction.

There are several types and forms of discrimination, and a great variety of reasons why banks, lenders, or credit agencies, tend to discriminate against people who apply for a loan.

This usually happens because of race, religion, beliefs, ideologies, behaviors, sexuality, even gender. 

But, what is lending discrimination exactly? In this article, you will learn what is it and what to do when you’re facing discriminatory practices.

Also known as loan discrimination, this is a practice carried out by banks, governments, or financial and credit institutions that deny loans to people, or to a group of people, either because of their race, their origin, sex, or even their religion.

There is also a law on equal credit opportunities because with the law mentioned above discrimination was still seen on the street. This law prohibits discrimination based on race, sex, religion, or marital status towards a person who receives income from a public assistance program.

You can protect yourself from lending discrimination, knowing the financial rules, amounts, and interests before making a loan application.

It is practically inevitable not to be a victim of loan discrimination since you never know when or when you may find yourself in such a situation.  This type of discrimination seen mostly in credit agencies and banks, carried out by lenders, usually leaves the victim in a very uncomfortable situation in all senses.  

The victims often leave without funds and a bad experience that will be hard to erase from their memories.  What you should do first is to know the laws, knowing that there are norms within the US constitution that defend you from any act of racism.  Placing a complaint in case you have felt that you were a victim of discrimination, is one of the options.  

We also invite you to take the situation calmly and to look for other lenders where you can obtain the loan without any kind of racist act, where they treat you like the best client, even if it is the first time you have entered their agency.

You should also ask probing questions, this will allow you to combat discrimination in some way. 

You should look for your mortgage (or any kind of loan) through several lenders, do not trust only one. Don’t be carried away by the pressure exerted by lenders on you to accept credit.

There are a lot of forms of discrimination but these, in general, are usually summarized in 2 types. 

Unequal Treatment

This type of discrimination is often obvious, such as when a lender rejects a woman just because she is on maternity leave.

In other words, discrimination or unequal treatment is the feeling that you are being treated in a different way but with a negative impact, that is, if you do not feel that you are being treated as the best customer, you are being discriminated against.

Involuntary Discrimination

This is exemplified when a lender only makes loans from certain amounts of money, which makes people from other social classes not be able to choose another amount of money, but the one that the lender has fixed.

It is also reflected when deceptive and very unfair practices are carried out, and these actions are known as predatory loans, where conditions that are practically impossible for the borrower to meet are imposed, and they are done with precisely that intention so that the borrower cannot comply with the installments of the payments.

One example of this is when you are looking for a bad credit direct lender loan and you encounter extravagant fees and interests that you won’t be able to pay back.

In the US, discrimination is considered a serious crime. If you think that you have been a victim of lending discrimination, what you should do is:

• Talk to the manager of the loan agency, and thus make a call to his attention, telling him how your experience with the lender was.
• The next thing you should do is contact the corresponding prosecutor in your area; formally file a complaint, they will attend to you and begin to investigate the case.
• You must file a complaint with the consumer financial protection office, which is in charge of investigating complaints of loan discrimination.
• File a discrimination complaint with your local HUD Fair Housing and Equal Opportunity office. You can make this complaint online.

It is important to understand that there are several types of discrimination that can occur when applying for a loan. Overt discrimination can be blatant or obvious, but lenders and borrowers must understand that it can occur unintentionally.

The uneven impact is the application of a neutral policy that can be adverse for a group, although it is applied consistently. Although the most common type of lending discrimination is unequal treatment, likely to be seen in credit bureaus, the other brings legitimate risks and should not be ignored.

Here in Flash Financial Guide we can connect you with lenders that won’t discriminate against you and will give you the opportunity and funds you need to solve your emergencies. Contact us to start your financial journey!