When creditors evaluate your income, can they legally refuse to consider income from public assistance?

Creditors are generally prohibited from discriminating against applicants based on the source of their income, including income from public assistance programs. According to the Equal Credit Opportunity Act (ECOA), lenders must evaluate all sources of income fairly and can’t refuse to consider public assistance income if it is a legitimate and consistent source of financial support for the borrower.

This means that if an individual receives public assistance, that income must be included in the total income calculation when assessing their ability to repay a loan or qualify for credit. While guidelines around lending may vary between lenders, the overarching legal framework mandates that all lawful sources of income, such as public assistance, should be taken into account when evaluating an applicant’s financial situation. Hence, creditors cannot legally refuse to consider this type of income.