The Racial Bias Hidden in our Credit Reports.
By Thom Hartmann A...
Every day, Americans are approved or denied for jobs, loans, and apartment leases based on the information contained in their credit reports. While this is a problem that needs to be address in every community, it has had a particularly devastating effect on minority communities.
According to Sarah Ludwig of The Guardian, credit reports “embed existing racial inequities in our credit system and economy.” She explained that decades of institutional racism like redlining and predatory lending have contributed to lower credit scores among minorities and they have perpetuated inequality, segregation, and poverty.
For example, banks systematically refused to make more loans in Black and Hispanic neighborhoods for decades, and that practice left communities of color without the home loans and investment needed to strengthen credit histories.
Without those traditional loans, minority communities are forced to turn to predatory lenders and check cashing stores for basic loans and financial services.
Those high-interest loans are more likely to end up in default, and appear as a negative mark on someone's credit. Back in the 90s, banks took advantage of these minority communities by issuing predatory mortgage loans, which led to waves of foreclosures in the black and Latino communities, and the eventual financial crash of 2008.
All of these factors have essentially locked decades of racist policies into the credit history of minorities, and that history follows them in every job or loan application. Despite mountains of evidence showing that credit histories have no demonstrated connection with a person's character or job performance, many employers still perform a credit check on prospective employees.
Various cities around the country have began banning this practice in initial employment screening, but, far too many people are still impacted by the over use of credit checks.
No one should be denied work because they were a victim of decades of racial injustice. Using credit scores to deny people homes or work is simply wrong, and it's time to stand up to the credit bureaus who profit off of that practice.
Comments
#2
Persoally, I think Mr. Hartman needs to understand that credit reporting is based on earning power. If the person is not employable in a high end job, or just making low wages in the job that they have, then their credit report should reflect this fact.
Obama persuaded Fannie Mae and Freddy Mac to guarentee Millions for banks and other institutions to let poeple buy houses, who were not qualified to buy a trailer. So it is with deep regret that banks now have to charge interest based on the earning potential, and not what the government thinks the person is worth.
#3
I think this whole credit racket is a form of tyranny. They have acquired WAY too much power over our lives. I've had a credit card for over twenty years and have maintained a PERFECT payment record; everything paid in full and on time: no exceptions. Yet my credit score is only 700-something, less than perfect-- and why? Because they've never made any money off me! I've never had to pay a penny of interest to any credit card company, in all these years. Not once. If I don't have the cash to back up a purchase, I put if off until I do. I REFUSE to go into debt and have someone else own a piece of me. No way!
Those people can just kiss my royal ASS.
#4
Why are letters getting cut off on my post, Nigel? The fifth line down from the top of my post has cut out the "f" in the word "of" at the end of the line. No tinkering in the "edit" box makes a damn bit of difference. Never seen THAT before.
#5
Duplicate deleted
#6
Self institutionalised bodies are unelected, accountable to no-one and only have their own agenda
That agenda effects "we the people"
These bodies are under no legislative control, they need to be culled, become accountable and rapidly
Insurance companies are amongst this group of unaccountables
There are many, many others
#7
While I agree with this article about credit scores and racism , this credit reporting practice also affects the former upper middle class white america as well. More former white middle class Americans who have fallen from credit grace have been affected as well. With so many job hunters HR departments have become overwhelmed and they rely on this scam as just another screen to diqualify applicants. There is little of what can be considered local employment in our communities since almost everything is corporate controlled and their corporate offcies and their policies are generally outside the states they practice in. I question wether states can affect corporate policy. One would assume this practice to be unconstitutional and there fore a crime against citizens of all states with corporations being held accoutable. In regard to predatory lending, its hard to separate the banks from the pay day loan shops based on interest rates. This whole mess is just an example of how corporations completely trumped freedom and democracy and turned an entire nation into a fnancial dictaotrship.
#8
Reply to #7: Right on delster! Well said. And like I pointed out in post #3, we also are punished for good financial behavior and staying out of debt.
Nothing short of a life-versus-death scenario would even tempt me to go into debt. It is a trap.
#9
P.S. In fairness, I'll have to share an exception to my no-debt policy that occurred to me just now; our purhase of a new car back in '09. But we managed to make all those payments over the next five years without missing a beat, 'til paid off... with zero interest! An exception that ended happily, thank goodness. I plan on having that l'il hatchback the rest of my life. Perfect for transporting music and video equipment. Woo-hoo!
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The entire credit reporting industry needs to be better regulated; even now, when you request a copy of your credit report, they don't have to tell you EVERYTHING they report to other inquiries; they don't even have to tell you your credit score or how they calculate it. And you can only get one FREE report a year.
The credit reporting bureaus make money on YOUR credit history - you should be entitled to a piece of that money, even if it's only a few cents.
As a person who has been victimized by inaccurate credit reporting, I want the right to examine, in minute detail, everything in my credit report and WHO PUT IT THERE, and when. And the right to prosecute for false reporting.