Credit reporting is a powerful tool for mass financial & economic discrimination.
A recent congressional hearing by the House Financial Services Committee on Consumer Credit Reporting reviewed flaws in the system, and highlights key facts that citizens can benefit from knowing. Watch video excerpts from the hearing, and read our highlights.
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Data is not blind. Using algorithms to make pricing and lending decisions costs African Americans and Latinos $250 -$500 million extra per year.
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Rashida Tlaib, U.S. Representative (D) Michigan
- “Credit scores should not be used for any non-credit purpose such as: employment, insurance, auto, home, rental…” – Ms. Chi Chi Wu, Staff Attorney National Consumer Law Center
- “…we found that there were ways that we could adjust the algorithm, taking out certain variables and changing the weighting in other variables that actually increased the predictive power of the algorithm but reduce the discriminatory impact.” – Ms. Lisa Rice, President and CEO National Fair Housing Alliance
Alexandria Ocasio-Cortez, U.S. Representative (D) New York
- “The credit bureaus are incentivized to favor the interests of creditors over consumers. Not the other way around.” – Ms. Chi Chi Wu, Staff Attorney National Consumer Law Center
- “A credit score was technically designed to do one thing, which was to predict the likelihood someone would be 90 days late in a two year period. That’s it. The fact that it is used for anything else is a travesty.” – Ms. Chi Chi Wu, Staff Attorney National Consumer Law Center
Sylvia Garcia, U.S. Representative (D) Texas
- To paraphrase Ms. Lisa Rice in response to Representative Garcia, Blacks and Latinos access credit from “alternative creditors”, you pay your bills on-time and have no late payments, yet you are dinged on your credit score (up to a 20 point credit score reduction) each time you access credit from alternative creditors. Your positive credit activity does not get added to your profile and is not added to your credit score.
It’s important to see the credit system in context. It’s one part of a much broader system that arguably is designed to discriminate against target groups, and uplift others. This system created the economic wealth gap and the community environments we call ghettos across America. These are not baseless charges. These are evidence-based historical facts. In a piece titled “Historian Says Don’t ‘Sanitize’ How Our Government Created Ghettos”, NPR covered how Richard Rothstein writes that recent unrest in Baltimore is the legacy of a century of federal, state and local policies designed to “quarantine Baltimore’s black population in isolated slums.” Racism and discrimination are a a big part of America’s history and legacy. While the players and the weapons have changed, …the game remains the same.