Fair Housing Act

The Fair Housing Act is a law that prohibits discrimination in the buying, selling, renting or financing of housing. This includes discrimination based on race, skin color, sex, nationality, religion, disability and children or any other characteristics from a protected class.

The Fair Housing Act is also known as Title VIII of the Civil Rights Act of 1968. It guarantees protection from discrimination on the part of any party involved in a real estate transaction. That includes landlords, realtors, sellers, government entities, insurers, or any other person or company that may have an influence in the decision-making process. It prevents them from using any portion of a persons protected class to deny them the ability to obtain housing. It further stipulates that all decisions for housing should be based off a person’s credit worthiness.

The U.S. Department of Housing and Urban Development is the primary enforcer of the Fair Housing Act. The Department of Housing and Urban Development website can provide additional information about what constitutes discrimination and how to proceed if a person feels that their inclusion in a protected class somehow negatively influenced a decision.

The Civil Rights Act of 1964 paved the way for this legislation. The Civil Rights Act was in direct response to changes in the racial and social structure of the United States at the time.

Creditworthiness is determined by reviewing several different factors such as income, debts, assets and credit score. Depending on the type of credit the borrower is applying for, different factors will be given different weight.

For instance, a mortgage company will review income as it compares to debts, credit score and the condition of the property that a borrower is looking to finance. An auto lender may look at the same qualities, but instead of looking at the condition of a property, they would instead review the automobile that the borrower was looking to secure the loan against.

A credit card company may decide that they only need consider a borrower’s credit report. If a borrower has a long history of making their payments on time and keeping their credit extensions low, a credit card company may issue the borrower a credit card without verifying income or available assets.

Some lenders have programs for well-qualified borrowers, using only their credit report to verify their creditworthiness.