Is a lender allowed to consider my age or where my income comes from when deciding whether to give me a loan? | Consumer Financial Protection Bureau (2024)

FAQs

Is a lender allowed to consider my age or where my income comes from when deciding whether to give me a loan? | Consumer Financial Protection Bureau? ›

must not consider your age unless

Discrimination against credit applicants on the basis of age is prohibited by the Equal Credit Opportunity Act. However, while lenders may not consider age per se when qualifying an applicant, they can look at age-related factors such as whether that applicant's income might drop because they are about to retire.

In any system of evaluating the creditworthiness of an applicant, a creditor may not: Consider any of the prohibited bases, including age (provided that the applicant has the capacity to enter into a binding contract) and the receipt of public assistance.

A lender generally can't deny your loan application or charge you higher interest rates or fees because of your age. This rule applies to various types of lenders when they're deciding whether to give credit, such as an auto loan, credit card, mortgage, student loan, or small business loan.

Age or age-related information may be considered only in evaluating other “pertinent elements of creditworthiness” that are drawn from the particular facts and circ*mstances concerning the applicant. For example, a creditor may not reject an application or terminate an account because the applicant is 60 years old.

Lending Discrimination Statutes and Regulations

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction.

Generally, a creditor such as a lender or broker cannot use your age to make credit decisions. However, there are exceptions to this rule. For example, age can be considered in a valid credit scoring system. Even then, the credit scoring system may not disfavor applicants 62 years old or older.

If you willfully lie on a loan application, you could end up seeing your loan rejected, having to pay back money you've just borrowed, taking out a larger loan than you can afford or facing legal consequences.

You Can Get a 30-year Mortgage at Any Age

But the law addresses more than just the age at which you apply. ECOA also prohibits lenders from denying a loan for other reasons that may be related to age.

An applicant's age can be requested if it appears that they cannot legally sign a contract. Creditors can ask about the number of children, their ages, and the borrower's financial obligations relating to the children. Marital status is also required if the applicant resides in a community property state.

What is an example of a fair lending violation? ›

For example, if a lender refuses to make a mortgage loan because of your race or ethnicity, or if a lender charges excessive fees to refinance your current mortgage loan based on your race or ethnicity, the lender is in violation of the federal Fair Housing Act.

'' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to con tract); (2) because all or part ...

Age is a major factor influencing your personal loan eligibility. It primarily affects the interest rate, loan amount and tenure. Thus, it becomes crucial to identify its impacts to make an informed approach while applying for credit.

The Equal Credit Opportunity Act (ECOA), which came out of the Civil Rights Act of 1964, says lenders cannot deny you credit based on age, as well as other criteria like race, color, religion, national origin, sex, or marital status.

Absolutely. The Equal Credit Opportunity Act's protections extend to your mortgage term. Mortgage lenders can't deny you a specific loan term on the basis of age.

No age is too old to buy or refinance a house, if you have the means. The Equal Credit Opportunity Act prohibits lenders from blocking or discouraging anyone from a mortgage based on age. If we're basing eligibility on age alone, a 36-year-old and a 66-year-old have the same chances of qualifying for a mortgage loan.