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? ›

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.

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.

Age is an important parameter impacting your eligibility for a personal loan. It affects your personal loan interest rate, repayment tenure, and loan amount. Thus, it is important to figure out its impact and accordingly devise a well-planned approach before you hit on the personal loan apply button.

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.

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.

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.

with Fair Lending Compliance

Specifically, ECOA prohibits a creditor from discriminating against an applicant in any aspect of a credit transaction on the basis of age.

The short answer is no. Your date of birth doesn't necessarily impact your personal credit score—but the age of your credit profile does. “What it means is the age of your credit report. Yes, your credit report has an age just like anything else,” writes Gerri Detweiler for Credit.com.

In addition, under § 1002.6(b)(2)(iii), a creditor may consider a borrower's age to evaluate a pertinent element of creditworthiness, such as the amount of the credit or monthly payments that the borrower will receive, or the estimated repayment date.

Is it harder to get a loan when you're older? ›

While it seems that mortgage lenders consider older borrowers a greater risk due to issues of income and mortality, homebuyers should note that under Equal Credit Opportunity Act makes it illegal for lenders to deny loans based on age.

Typically, as you get older, you're likely to be offered a shorter repayment period on a mortgage than a younger borrower would (typically, mortgage terms last 25 years). You might also find that you're offered fewer deals.

You Can Get a 30-year Mortgage at Any Age

Thanks to the Equal Credit Opportunity Act, a lender can't discriminate against an applicant due to age, says the Consumer Finance Protection Bureau (CFPB). You could be 99 years old and get a 30-year mortgage as long as you qualify.

Though they can't discriminate, lenders take into account age-related factors for applicants 65 and older.

The road to homeownership is not always easy. Here's another challenge: Once you reach a certain age, it can be harder to secure a mortgage. Especially when you hit 70. That's according to new research from the Center for Retirement Research at Boston College.

Disparate treatment occurs when a lender treats a credit applicant differently based on one of the prohibited bases. It does not require any showing that the treatment was motivated by prejudice or a conscious intention to discriminate against a person beyond the difference in treatment itself.

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.

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.

Like fine wine, whiskey and cheese, most credit histories only get better with age. Although the length of your credit history only accounts for 15% of your FICO^® Score, it's still an important influence on lenders. It can definitely impact the chances of whether or not you get a loan.

A creditor may not consider age unless the applicant is too young to legally sign a contract (usually younger than 18), although the creditor may consider age in determining whether income will drop because of retirement.