Final answer:
The Equal Credit Opportunity Act prohibits discrimination against applicants based on their income source, including if it is from public assistance. This ensures fair access to credit for all individuals and aims to prevent economic abuse.
Step-by-step explanation:
Under the Equal Credit Opportunity Act (ECOA), it is unlawful to discriminate against an applicant because their income is derived from any public assistance program. The ECOA protects individuals from discrimination based on certain characteristics, including their source of income. It ensures that all applicants receive fair and equal treatment when applying for credit, without prejudice concerning their income source, whether it is from employment or public assistance.
Lenders are required to consider all reliable income sources when making a credit decision and cannot deny credit solely because a portion of the applicant's income comes from public assistance. The intention behind this stipulation of the ECOA is to prevent economic abuse and ensure equal access to credit for all individuals, regardless of their income origins.