There is a critical need to be aware of the specific government legislation that pertains to business credit. Government legislation not only creates and protects the rights of creditors but also imposes limitations on business activities. Moreover, credit department policies and procedures should be in place to ensure that staffs act within the boundaries of the law. Training department staff is critical in this area.
ECOA became effective in 1987 and was amended in 1989. Its provisions promote the availability of credit to all credit worthy applicants without regard to race, color, religion, national origin, sex or marital status or age. Creditors shall not discriminate on these factors. Like many regulations ECOA extends to business credit, as well and requires certain record keeping of applications and material used to deny credit.
FCRA is Title VI of the Consumer Credit Protection Act and became effective on 4-25-71. The purpose of the Act is to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of consumer credit, personal insurance and other information in an accurate, fair and equitable manner. The Act guarantees a consumer a right to know all credit information that is maintained by credit bureaus and consumer reporting agencies.