Fun fact - those are not entirely unrelated entities.
Credit scores actually help minorities.
The system didn’t really kick off in the US until 1989, which I’d guess is more recent than most realize. Until then, you had a sit-down with the bank officer and explained your need. How well do you think THAT went over for black people?
When you apply for credit, the creditor has no clue about race. (Your name can be an indicator. LOL, ask this white boy about getting trashed resumes until I dropped my “black” middle name. 🙄) You’re an anonymous number, all they care about. How in the world could you conflate that with racism?
So, if anything, credit scores clearly work against racism. You could argue that they hurt poor people, and you would be somewhat correct. But lenders aren’t exactly clamoring to loan money to the destitute. In a perfect world, your credit score reflects your ability to repay the loan.
Im glad you have found success with your credit score experiance.
On the other hand, Heres a paper reflecting on a few studies showing how credit scores can poorly affect minority communities.
In Cuyahoga County, there are significant disparities in credit health across neighborhoods. Communities of color have the lowest median credit scores, the highest percentage of individuals with subprime credit scores, and the highest share of individuals having debt in collections. On the other hand, majority white communities have the highest median credit scores, lowest percentage of individuals with subprime credit scores, and lowest share of individuals having debt in collections. These disparities are reflected in access to mortgages, mortgage denial rates, and arguably shape access to rental housing. Relying on credit scores and credit histories to determine access to rental housing and mortgages disparately impacts communities of color and helps exacerbate existing inequalities in the region.
And further
In practice, the reliance upon credit scores in evaluating borrowers and tenants disproportionately disadvantages communities of color, perpetuating another cycle of economic and housing injustice.
Yes, absolutely this.
Do people think that if they didn’t have a credit score, banks would just freely give loans to anybody? Nah, man, without credit scores, they judged you by your reputation in the community (and if you were black, you probably didn’t share the same ‘community’ with the banker) or else on how much they trusted you. You can imagine how that would go for black people.
And when you got rejected, it wasn’t “ahh well better pay my bills on time for a couple years then try again”, you were just shit outta luck.
And before bank loans (which is another thing people are commonly against) you literally had to have a rich relative, or take loans from a rich person on ridiculous terms.
Credit scores can be pretty annoying when you’re getting started, but they’re a pretty reasonable way for anybody to demonstrate that they can be trusted with money. And they’re a lot better than the old system (still current in much of the world) of: are you already rich or from a rich family? No? Well fuck you then.
Credit scores are an improvement over white bankers deciding who gets loans. But they’re not an improvement over black-owned banks deciding who gets loans. The whites bombed Black Wall Street and then added a less bad (but still bad) alternative.
I regret to inform you sir that you have the stupid. Please get it checked out for everyone’s sake before you hurt yourself or others around you.
The purpose of today’s credit score system is to eliminate bias. Before credit scores, borrowers were deemed creditworthy by lenders using factors such as income, referrals and even home visits. In 1974, the Equal Credit Opportunity Act disallowed credit-score systems from using information like sex, race, marital status, national origin and religion.
Today, FICO considers payment history, amounts owed, length of credit history, new credit and credit mix in its model. But that data may be influenced by generational wealth that many Black and Hispanic borrowers did not have equal access to, says Frederick Wherry, professor of sociology and director of the Dignity and Debt Network at Princeton University.
“We’re often told to stop talking about history, but history won’t stop talking about us,” Wherry says. “The data used in current credit scoring models are not neutral; it’s a mirror of inequalities from the past. By using this data we’re amplifying those inequalities today. It has striking effects on people’s life chances.”
The article you provided and states right there that those who do not have generational wealth don’t benefit from credit scores because several of the considered factors are things they don’t have.
I don’t know if I buy that they were created to reduce discrimination, but even if they were, it’s an incredibly flawed system.
If a person pays off a loan that is a good thing. That shouldn’t make tour credit score lower.
I paid off a loan and a card and consolidated my debt to a lower interest rate loan and my score dropped 20 points even though I had overall less debt and at a lower interest rate. All because the average age of my credit dropped.
Critical thinking skills and ability to do ones own research are essential life skills. But here ya go champ…
https://www.bostonglobe.com/2022/04/24/opinion/giving-credit-where-its-due/
https://medium.com/commonfuture/why-credit-scores-are-racist-da109fcfb300
https://www.cnbc.com/2022/10/11/how-structural-racism-plays-a-role-in-lowering-credit-scores.html
They can’t provide proof because it’s blatantly untrue. Perhaps they propose going to back to in-person interviews to determine credit worthiness?
“John goes to my church, solid guy. Approved.”
“I’m sorry Jamal, maybe come back when you have lighter skin?”
I’m going to translate what you’re saying in simpler terms, maybe you’ll come to understand that what you’re saying isn’t quite alright.
“Back in the day they used to force feed horse shit to people”
“nowadays we put a lot of effort making the horse shit look more appetizing by wrapping it in a tortilla and sprinkling some chives on it and delivering it right to their doors. Can you believe those same people are still complaining? They got no idea how good they have it now”
There is none. However, implying that race effects your credit score is in fact a pretty racist thing to say. Classic Marxist mentality.
I regret to inform you sir that you have the stupid. Please get it checked out for everyone’s sake before you hurt yourself or others around you.
Problem is humanity can’t help but simp for ambitious men. Genghis Khan would have been nothing but a drunk horse rider if people didn’t go “yeah let’s do that”.
Look around how we simp for the billionaires now. This shit is genetic. Those who think differently tend to get themselves purged from the genepool too. “Heretic” n shit.
Hey I didn’t want this.
And total self-destruction through unmitigated greed
