Make Big Banks Work for US!

Homeowners in Cincinnati are being gouged with sharp increases in their homeowners insurance. Hard workers that pay their bills on time in Cleveland are being denied mortgage loans. Former public housing tenants in Chicago are being prevented from renting apartments.

People in these cities are being told that their low credit scores are keeping them from accessing the services they need. This is not just happening in those cities, it is happening throughout the country.
Credit scores are becoming the decisive factor in many financial services, including:

• homeowner insurance policies;
• apartment rentals; and
• home loans from banks and mortgage companies.

However, the formula used to determine credit scores is unknown to the public, discriminatory, and many speculate whether it is an accurate way to determine a person’s financial life.

A credit score is a single number that is based on an analysis of information contained in a credit report. It is designed to provide an indication of how likely a person is to repay his or her debts. It is based on several types of information, including payment history, amount of debt owed, and types of credit used. Credit scores can range from 300-800. The higher the score, the more credit worthy a person is considered.

Credit scores, and the credit reports on which they are based, increasingly influence consumers’ access to credit, housing, insurance, basic utility services, and even employment. So if a person has a low credit score, he or she could be denied a mortgage loan, a rental apartment, homeowners insurance, car insurance or even a job. In addition, a lower credit score often causes a borrower to be steered toward a subprime or a predatory loan.

Accessing Your Credit Score

According to the Fair Isaac Company (FICO), the company that developed the software to make a credit scores:

• More than 1,400 financial service providers, including the world's 10 largest banks, and 96 of the top 100 US banks use credit scores.
• About 65% of the world's credit cards, including the top 50 US credit card issuers, use FICO scores.
• FICO scores are used in 75% of US mortgage originations.

The Case Against the Crooks

There are many scientists and corporations that doubt credit scores' ability to predict your rate of repayment. Credit scores ignore non-traditional sources of credit, which include rent payments. Many sources of credit in low-income neighborhoods like rent-to-own stores are weighted differently.

This year, NPA groups are examining the issues of credit scores at the CRA workshop on Sunday, March 28.