Final answer:
The ECOA generally prohibits age discrimination in lending but allows age to be considered for determining creditworthiness, if an applicant is too young to enter into contracts, or to give favorable credit terms to elderly applicants.
Step-by-step explanation:
The Equal Credit Opportunity Act (ECOA) is a federal law designed to prevent discrimination when lenders make decisions regarding the extension of credit. Under the ECOA, it is illegal to deny a loan based on certain characteristics including gender, race, and ethnicity. As for age, the ECOA generally prohibits discrimination based on age. However, there are specific circumstances where age can legally be considered.
One such circumstance involves creditworthiness. If age is used in the calculation of a system that measures creditworthiness, it may be considered, but it cannot be used to disqualify an applicant. Furthermore, the ECOA allows for age to be a determining factor if the applicant is too young to sign contracts under state law. Lastly, age may also be considered in favor of elderly applicants, typically defined as those aged 62 or older, to offer more favorable credit terms.