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A good article on credit scoring, and how to improve your score.

http://moneycentral.msn.com/articles/banking/credit/1340.asp

v/r

Michael
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Again, I note the sentiment of banks and CRAs: They want all diligent repayers to behave exactly alike. Total conformity makes the system run well. Anyone who is "unconventional" -- i.e. who doesn't have a college degree, who moves around, who is minority-race -- gets relegated to being a second-class citizen, running into much higher barriers.

We're moving towards 1984 faster and faster.
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Thanks for the article.

I was quite suprised to read the following:

As it is, though, if you get a bad score and you're turned down for credit, you can't find out what elements pulled it down. Some things are obvious. A high income earns more points than a low income. But minorities get lower scores, too; a controversial issue that McCorkell insists does not lead to rejection of credit applications by minorities. "Minorities and low-income borrowers present a slightly larger risk," McCorkell says.

The score is then transmitted to the lender, which makes the ultimate decision on whether a credit application is approved or denied. Lenders insist that the scoring system does not unfairly hurt minorities, but simply reflects overall lending histories.


I wonder how much of this is the chicken and the egg effect. A minority has a lower score and therefore can only get credit at higher intrest rate. The higher rate makes it harder to repay the load.

The whole statement reminds me of an Eddie Murphy skit on SNL. He goes into a back disguised as a white man and the bank officer starts to shove money at him.

Isn't this practice non-constitutional.

AC
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http://moneycentral.msn.com/articles/banking/credit/1340.asp



Wow!

I thought the comments about minorities is rather damning evidence. How can a lower score not lead to credit rejections?

Robb
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