Many consumers applying for credit have heard this phrase at least once. Most often, it seems to be heard in the finance offices of car dealerships. Over the years, we’ve met many married clients who have visited auto dealerships with the intent to apply for credit individually. The desire to apply individually might be for any number of reasons– the spouses might maintain separate finances or the non-applying spouse might have a poor credit score—every situation is different. The bottom line, however, is that there is no requirement that spouses apply for credit jointly. If an applicant’s credit score does not meet the creditor’s requirements, the creditor is allowed to request that the applicant obtain a cosigner for the loan in order to be approved. What the creditor is not allowed to do, however, is require that the cosigner be the spouse of the applicant. Too often, we hear of lenders returning to the applicant and specifically requesting that their spouse cosign for the loan. Such a request is unlawful under the Equal Credit Opportunity Act (“ECOA”). ECOA, which was enacted to prevent discrimination in lending decisions, requires lenders to make extensions of credit equally available to creditworthy applicants without regard to:
race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); to the fact that all or part of the applicant’s income derives from a public assistance program, or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act.
A creditor’s requirement that the applicant’s spouse co-sign for the loan violates ECOA because the creditor is making a lending decision based on the marital status of the applicant. As the consumer, the applicant is entitled to the cosigner of his or her choice, so long as that person is creditworthy. Any creditor’s representation to the contrary is both false and unlawful under ECOA.