Is a lender allowed to consider my age or where my income comes from when deciding whether to give me a loan?
No, a creditor such as a lender is generally not allowed to make credit decisions based on your age alone. Lenders are not allowed to refuse to consider income from your part-time employment, pension, and certain other sources.
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.
Here are some exceptions:
- A lender can refuse to lend money to someone who is too young to enter into a legal contract. State law controls the legal contract age and this may vary depending on the type of contract.
- Age can be used as part of a valid credit scoring system as long as it does not disfavor applicants 62 years old or older. Valid credit scoring systems may favor applicants 62 years or older.
- A lender may relate your age to other information they use to decide if you are creditworthy. For example, a lender or dealer may consider your job and length of time to retirement to determine whether your income, including your retirement income, will be adequate for the life of the loan.
Lenders are not allowed to discount or refuse to consider income that comes from:
- Part-time employment
- An annuity, pension, or other retirement benefit
- A public assistance program. This includes, but is not limited to, social security and supplemental security income (SSI), social security disability insurance (SSDI), unemployment compensation, Temporary Assistance to Needy Families (TANF), and the Supplemental Nutrition Assistance Program (SNAP).
Like all other forms of income, however, a lender can consider the amount of the income and likelihood that it will continue.