The Biden administration issued a statement on Thursday cautioning banks against considering an applicant’s immigration status when approving credit.
Financial institutions are advised in a joint statement from the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) that while it is legal to take into account an individual’s immigration status when determining whether to lend money, doing so excessively may violate the law.
The claim makes reference to the Equal Credit Opportunity Act (ECOA), which prohibits discrimination on the basis of race, color, religion, national origin, sex, and other factors when evaluating a person’s credit application, despite the fact that citizenship status is not specifically listed as a protected characteristic by the law.
According to a press release from the Consumer Financial Protection Bureau, the agency received numerous reports of consumers who were denied credit cards, auto, student, personal, and equipment loans because of their noncitizen status despite having strong credit histories and ties to the country.
According to the press release, the two organizations admit that while if the ECOA authorizes creditors to take someone’s citizenship status into account, doing so may go against restrictions on the consideration of other characteristics like national origin or race.