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Credit Claims For Boston Students: Legal Considerations And Guidance – I didn’t read it, but it should have. Boni, who immigrated to the United States from Mexico in his early 20s, needed to buy or lease equipment for his growing independent construction business. It was 2016, and he was making good money and paying for his house and other living expenses. But with no credit history, her options for expanding her job opportunities were limited and included high interest rates that seemed expensive and risky.
Without a credit score, Boni was stuck. Everything he did with his money would be fine if the reporting companies knew about it. They didn’t.
Credit Claims For Boston Students: Legal Considerations And Guidance
Congressman Keith Ellison, Minnesota Democrat, and Pennsylvania Republican Michael Fitzpatrick joined forces in September 2013 to tell the story of people like Boni and tens of millions of others who were, as Fitzpatrick said, “paying their bills on time. They’re paying their cell phone bills, their utilities, and they’re paying their homeownership.” . These good credit events are not mentioned anywhere, but God forbid you miss a payment.”
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There was nothing wrong with what Boni did, or what many Black and Latino people were doing. He was not the type of credit card companies had in mind when they developed and promoted consumer credit scores. The result is that millions of Americans who should have access to credit do not.
A 1970 federal law required that hard, hard facts guide credit decisions, rather than the wild guesses that were common at the time. This has led to a rise in credit debt.
One of the loan originators, William Fair, testified before Congress in 1979 that there was a systematic use of information to determine who is creditworthy, and who has the highest risk of default.
Fair was opposed to Congress banning the use of race, gender, or other social groups to be used in evaluating creditworthiness. He thought that those things would have meaning in some way and therefore should be used. If the public’s concern was about how credit opportunities were distributed, he said, it wasn’t the data’s fault.
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‘More than half of black adults today have no credit or a credit score below 640, which is considered “poor” or “good” credit risk.’
But, he announced, choosing justice was the job of the judges. He told the senators on the court that ensuring justice is your right, duty, and responsibility, not mine. I will follow the law and advise our customers to do exactly that. “
The credit score system Fair helped create, listed today as the FICO score, starts at 300 and runs up to 850. More than half of Black adults today have no credit or credit below 640, considered to be “poor” or “good.” credit risks, two percent are the lowest in five. For customers with sub-620 score, 41% have late payments in the past 30 days. And 28 % of people in this category are “probably delinquent,” according to the Experian credit-rating bureau. A Brookings Institution report found that counties with residents with credit scores below 660, but above 560, had the highest black and Latino populations, accounting for 28 % and 19% of the population of the district, respectively.
People with low credit scores are more likely to be denied loans, loans, and credit cards – or charged higher interest rates than people with high scores. Consumers with excellent credit scores above 760 could save less than $33,000 in interest payments on a 30-year loan, enough to buy a car or pay for two years of public university tuition, according to a 2016 report.
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As a result, Black and Latino taxpayers pay more for the same goods and services as their White counterparts, or are denied the opportunity to purchase them altogether because of their low scores.
As Fair told Congress, complete information about a potential customer is better than incomplete information. Selecting – or restricting – one of those details may appeal to group members over another. But as Senator Carl Levin, a Michigan Democrat, reminded Fair at that hearing, the government had decided credit decisions should not “disparage people because of their race, religion, ethnicity, sex, marriage, age, or disability.”
Congress had made a decision to put some limits on the market, Levin continued, telling the Fair, “Society has decided that we are not going to stereotype people based on their race or religion or ethnicity for social purposes, even if it has numerical value, even if a computer can tell us that people from Yugoslavia pay faster or slower than people from Austria. We’re not going to let you do it.”
Sen. Paul Tsongas, a Massachusetts Democrat, declared that some human behavior is wrong: “There are some things that a person can change with their behavior – whether you pay your bills, what kind of car, etc. – while there is no way you can get out of being White, Black, Greek, Hungarian, or whatever.” Race, gender and other immutable characteristics, Levin said, “have nothing to do with the motivation or ability, if you want, to participate in the system effectively.”
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Fair took a limited view of the regime created by the government. He believed that it should be up to the data analysis to determine if and when race or gender is significantly related to payment patterns. If it happens to work, it works. If that increased racial inequality, the cause would be objective danger, his argument went, rather than prejudice. Fair’s views, though negative, shaped the landscape of America’s debt.
Today’s credit scores depend on the chosen history. Its creators say the scores are based on a person’s history, but a lot of important information is left out. For example, job disruptions are higher for blacks and Latinos, who are more likely to be in jobs that are at risk of recession or are often the last to be paid but the first to be fired. Disruption appears to be a neutral indicator of a person’s creditworthiness unless you ask what causes the delinquency in the first place.
Similarly, the assumption that similar behavior will be equally rewarded also ignores evidence to the contrary. Home ownership yields lower returns on real estate investment equally in majority-Black versus majority-White neighborhoods. In times of financial crisis, such as the coronavirus pandemic, existing income gaps have widened because families with less ethnic wealth have a harder time coping with the crisis.
The effect of bad credit goes far beyond a person’s ability to borrow money – and even affects their earning power. About a quarter of businesses say they ask for job applicants’ credit reports — even though they’re not allowed to see credit scores — when deciding who to hire.
Giving Credit Where It’s Due
There is no evidence that credit reports predict employment. But some employers say they check credit records out of fear that a person with financial problems might be tempted to steal, or that someone with a large amount of money who missed out might be unorganized or unable to comply.
In a random experiment with more than 1,000 hiring managers, researchers found that women with a bad credit history were less likely to be called to a job interview than men with a similar report. The findings improved across race, at least among men, where Black people were more likely to be called in for job interviews but were more likely to have hiring managers offer them a lower starting salary than their White counterparts. As explained in the Book of Matthew, for those who have little, even much will be taken away.
It doesn’t have to be this way. Congress can make the debt equal by doing two things.
First, the US Congress can control how credit reports are used, prohibiting them for hiring, promotion, and other non-credit purposes. Work histories and background checks, not credit reports, would determine who gets hired and promoted.
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Second, Congress could provide a public option for consumer credit scores, competing with private companies’ formulas. That way, all Americans can have a clear set of criteria used to estimate their ability to repay the loan.
This public policy may use mobile phone bills, rent payments, bank transaction and cash flow data, and other financial information related to credit. It can create meaningful differences in its sectors from those of the private sector, bringing more accountability and competition into the system.
With a public vote against racism, the United States can take a step toward acknowledging that the country’s history shapes the injustices visited upon some of its people. William Fair did not want to talk about the legacy of present and past racism, although he wanted to use race to make decisions. It would be wrong to stop talking about this history because in creating credit scores, the history of American nations does not stop talking about us.
Frederick F. Wherry is a professor of sociology at Princeton University and director of the Dignity + Debt Network, a partnership between
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