On what factor can a lender legally deny an applicant credit?

A lender can legally deny an applicant credit based on income stability, as it is a key factor in assessing an applicant's ability to repay a loan. Lenders are required to evaluate the creditworthiness of applicants, which includes looking at their income, employment history, and overall financial situation. Lack of income stability may indicate that the applicant could struggle to make consistent mortgage payments, prompting lenders to consider them a higher risk.

In contrast, factors such as receiving public assistance, participating in a consumer credit counseling program, or being divorced cannot be solely relied upon to deny credit under federal laws. These aspects do not directly reflect an applicant's ability to repay a mortgage and are often protected by regulations that forbid discrimination based on socioeconomic status or life circumstances. Therefore, focusing on income stability as a basis for denial aligns with the lender's responsibility to ensure they are issuing credit to individuals who have a realistic chance of fulfilling their financial obligations.