Posted by Eric J. Ellman
If you’ve looked at your credit report, you’ll notice that it is full of information about your credit situation – how much you owe, to whom, what your credit line is, what your payment is, things like that. But take another look and you’ll notice what isn’t on there. Credit reports don’t include a person’s race, religion, sexual orientation, gender, national origin, marital status or the color of skin. In fact, it is illegal to include any of these identifying traits under the federal Fair Credit Reporting Act and Equal Credit Opportunity Act.
We know there are probably some misconceptions about our industry on this front. Some people don’t know these protections exist or they think credit reports actually contribute to discrimination today. This just isn’t true – in fact, objective data are the best way to beat bias.
Because of credit reports, lenders today have objective facts to use in assessing borrowers’ credit status. Federal regulators, state attorneys general and courts have multiple tools to push back against illegal lending discrimination.
CDIA recently released a white paper outlining the value proposition of the credit reporting industry. The paper explains that credit reports give lenders a comprehensive set of important data. It is not the whole picture – lenders still need to learn about income and assets and things like that. But it is important, objective information that does not include things like race, gender, marital status or other things that which could lead to biased lending decisions.
The financial system works best when as many people as possible participate in the system. And, that system only works when people are evaluated according to their objective and statistically sound credit history, not based on skin color, age, physical nature or gender. Our credit reporting system plays a critical part in making sure that we are removing bias from the system as much as possible.
This is one way CDIA and our members work to empower economic opportunity every day.