What does the Equal Credit Opportunity Act (ECOA) aim to prevent?

The Equal Credit Opportunity Act (ECOA) is designed primarily to prevent discriminatory lending practices in the credit market. Specifically, it prohibits lenders from discriminating against applicants based on race, color, religion, national origin, sex, marital status, or age, as well as consideration of income from public assistance programs. The act ensures that all individuals have equal access to credit, promoting fairness and equality in lending decisions. This is crucial for protecting consumers and fostering an environment where everyone has the opportunity to secure loans and credit without bias.

While the other options touch on issues that may arise in the lending process, they do not align with the main objective of the ECOA. Fraud in mortgage applications, unfair pricing of loans, and defaulting on loans are significant issues but are addressed through different regulations and practices rather than being the primary focus of ECOA. The act's core mission revolves around ensuring that credit is granted without discrimination, reinforcing the principle of equal treatment in the lending industry.