Financial credit discrimination happens when lenders, banks, landlords, or creditors treat certain people unfairly based on protected characteristics rather than their actual creditworthiness. In Illinois, the Illinois Human Rights Act (IHRA) prohibits financial credit discrimination to ensure that everyone has fair access to loans, credit cards, mortgages, and rental housing applications.
While some forms of credit discrimination are obvious – such as denying a loan outright – many cases are more subtle and difficult to detect. This post explains what financial credit discrimination is, how to spot it, and what legal options you have if you’ve been unfairly denied credit in Illinois.
What Is Financial Credit Discrimination?
Under the Illinois Human Rights Act (775 ILCS 5/5-101), financial credit providers – including banks, mortgage lenders, credit unions, landlords, and auto lenders – cannot discriminate based on:
- Race, color, or national origin
- Sex, sexual orientation, or gender identity
- Age (40 and older)
- Religion
- Disability
- Marital status
- Military status
- Order of protection status
This means that credit decisions must be based on objective financial factors – such as income, credit history, and debt-to-income ratio – rather than a person’s background, identity, or personal circumstances.
Examples of Financial Credit Discrimination
Some examples of clear and illegal financial credit discrimination include:
- A bank denies a mortgage loan to a Black applicant despite having a higher credit score than a white applicant who was approved.
- A landlord refuses to rent to a single mother because he believes single parents are financially unreliable.
- A car dealership offers higher interest rates to Latino customers than white customers with identical credit profiles.
- A lender refuses to extend credit to a transgender person, claiming they are a “higher risk” borrower despite good credit history.
However, discrimination in financial credit decisions is not always so obvious. Many subtle forms of discrimination can also violate Illinois law.
Subtle Forms of Credit Discrimination
Sometimes, discrimination happens through unequal terms, unreasonable barriers, or predatory lending practices rather than outright denial. Here are some examples:
1. Offering Different Loan Terms Based on Identity, Not Creditworthiness
A bank offers higher interest rates or fees to members of a specific racial or ethnic group, even though their financial profile is the same as other borrowers.
Example:
- A Black couple applies for a mortgage and receives an interest rate 0.5% higher than a white couple with the same income and credit score.
2. Steering Borrowers to More Expensive Credit Products
Lenders may push certain groups into predatory loans or riskier financial products, even when they qualify for better options.
Example:
- A Latino borrower applies for a traditional mortgage loan but is steered toward a high-cost subprime loan despite having good credit.
3. Imposing Stricter Qualification Standards on Certain Groups
A creditor may set unnecessarily high barriers for certain applicants, even though others with the same financial profile are approved.
Example:
- A Muslim business owner applies for a small business loan and is asked for extra documentation that other applicants aren’t required to provide.
4. Discouraging Applications from Certain Groups
A lender or financial institution may try to dissuade people from applying in the first place.
Example:
- A bank employee tells a Black applicant, ”You might not qualify for this mortgage, but there’s a payday loan service across the street.”
5. Applying Different Credit Standards to Men and Women
Lenders are legally required to apply the same underwriting criteria regardless of gender.
Example:
- A divorced woman applies for a credit card and is required to show proof of additional income that male applicants aren’t asked to provide.
How to Recognize and Prove Financial Credit Discrimination
Since discrimination in lending and credit decisions is often subtle, proving it can be challenging. If you suspect financial credit discrimination, take these steps:
- Compare Loan or Credit Terms – Ask for written explanations of terms and compare them to other similar applicants.
- Request a Written Denial – Under federal law, lenders must provide a written reason for credit denials.
- Check Your Credit Report – Ensure that your credit history is accurate and free of mistakes.
- Gather Evidence of Discrimination – Save emails, loan offers, denial letters, and notes from conversations with lenders.
- Look for Patterns – If a lender consistently offers worse terms to certain groups of people, it may be engaging in discriminatory practices.
How to File a Financial Credit Discrimination Complaint in Illinois
If you believe you’ve been discriminated against when applying for credit, you can file a complaint with the Illinois Department of Human Rights (IDHR).
How to File an IDHR Complaint for Credit Discrimination
- Deadline: You must file within one year of the discriminatory act.
- How to File:
- Online: Through the IDHR website
- By Mail or In Person: At an IDHR office
- By Phone: Call IDHR to initiate a complaint
- Investigation Process:
- IDHR will review documents, interview witnesses, and assess whether discrimination occurred.
- If IDHR finds evidence of discrimination, the case can proceed to a hearing before the Illinois Human Rights Commission (IHRC) or a lawsuit in state court.
Other Legal Options
If IDHR does not resolve your complaint, you may be able to file:
- A federal lawsuit in federal district court
- A lawsuit in Illinois Circuit Court seeking damages for discrimination
Justice Legal Counsel Can Help
Credit discrimination can affect your ability to buy a home, start a business, or secure financial stability. If you believe a bank, lender, landlord, or financial institution has unfairly denied you credit, charged you higher fees, or treated you differently based on race, gender, disability, or another protected status, you may have a legal claim.
At Justice Legal Counsel, we help individuals in Chicago and throughout Illinois fight back against financial credit discrimination. We can help you gather evidence, file complaints with IDHR or court, and take legal action against discriminatory lenders.
Contact us today for a consultation to discuss your options.