What does the Equal Credit Opportunity Act prohibit?

The Equal Credit Opportunity Act (ECOA) is designed to promote fair lending practices and prohibit discrimination in credit transactions. One of the key aspects of this law is that it makes it illegal for creditors to discriminate against applicants based on specific characteristics. Among these protected categories are sex and marital status, which means that lenders cannot refuse to grant credit or offer less favorable terms to applicants on these bases.

The purpose of including sex and marital status as protected categories is to ensure that all individuals have equal access to credit opportunities, regardless of their gender or relationship status. This provision plays an essential role in fostering an equitable lending environment and helps combat historical prejudice faced by certain demographics.

The ECOA also broadly covers other forms of discrimination, but the emphasis here is on sex and marital status, making this choice the correct answer. Understanding the details of the ECOA is crucial for Mortgage Loan Originators, as it is a foundational part of responsible lending practices.