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For most consumers in the United States, a good credit score represents a pathway to increased wealth and access to a “better life” — the American Dream. As we are beginning to discover, however, not all pathways may be equal to every one of us. Not all are fair.

Traditional credit scoring systems have received a significant amount of attention in the latter half of the last decade from those who question their accuracy and the use of data that may inherently exercise certain bias. That bias may disallow other forms of data or payment reportings (rental, auto) that may inform a larger segment of people, like certain Hispanic and Black consumer groups. 

Such complaints also include the absence of public scoring models and the fact that credit scores are used to determine facets of life that have nothing to do with credit, like finding a job. 

Credit scores in the U.S. simply don’t work for many Black and Hispanic Americans, who statistically have lower levels of credit quality than other racial groups. Now imagine you’re one of 26 million Americans who are deemed “credit invisible,” essentially have no reportable credit history with any of the three national credit reporting agencies — Equifax, Experian, or TransUnion. Therefore, you are locked out of today’s credit reporting system. According to the Consumer Financial Protection Bureau Black and Hispanic consumers, and those consumers living in low-income neighborhoods, have higher credit invisibility rates. 

About 54 percent of Black Americans claim they have no credit, a poor-to-fair credit score, or any score that is below 640, according to a survey by Credit Sesame. About 41 percent of Hispanics also fall into this category. Compare those figures to 37 percent of white Americans having poor-to-no credit with only 18 percent of Asian Americans. 

While recent entities may help balance credit scores like Experian’s Credit Boost, which takes into account phone bills and cable payments, many still don’t. 

About 41 percent of Hispanics claim to have no credit a poor-to-fair credit score, or any score that is below 640, according to a survey by Credit Sesame.
Photo: Mateus Campos | Unsplash

How a public, rather than private, scoring system may offer improved racial equality

A recent Congressional Research Service report found that “consumers sometimes find it difficult to advocate for themselves when credit reporting issues arise because they’re not aware of their rights and how to exercise them.” Moreover, the report states “The Consumer Financial Protection Bureau receives more credit reporting complaints than complaints in any other industry it regulates.” 

That doesn’t bode well for Black and Hispanic consumers when they take the biggest hit on debt collections, according to a National Consumer Law Center report. The report added that in New York City, 95 percent of consumers with default debt claim judgments resided in low- or moderate-income neighborhoods. More than half of those consumers were in Black or Hispanic communities. 

Opponents of the Big Three reporting agencies believe they have formed a de facto oligopoly. America’s consumers have no input, no say, in which companies are allowed to access their personal financial data or which company hands out the consumers’ credit report to any establishment that wants it. 

If a consumer’s credit score is getting hit here and there on any one of the agencies’ credit reports, that consumer has no input on which bureau or score to use. Credit reporting agencies possess nearly unlimited amounts of info on consumer information. From credit card payment history to bounced checks to filling out an application for a mortgage, these bureaus can find it, and they can determine upon those scores whether they think the consumer can afford that apartment, car, or even that job. 

What solution can possibly be offered for Black and Hispanic Americans? According to Princeton University sociology professor and Dignity and Debt Network director Frederick Wherry, good old capitalist competition might be the answer. “I’m not saying we need to eliminate private scoring companies but I think it’s a win if you create a competitive environment with consumers by having that public option available. It’s like USPS and FedEx. I have the choice to go with a cheaper public mail carrier or get special services from a place like FedEx. We create a public entity for something like the post but not something as monumental as your credit score.” 

QCash Financial understands the nature of the credit scoring system, particularly how they impact the opportunity to get a loan from their credit union. Our QCash life event loan platform uses our proven, proprietary decisioning engine by examining the member relationship through behavior data. By compiling a detailed 360-degree determination, we can begin working with them individually to set financial goals that will get that member’s credit score in a better place and get the member back on the path to better financial inclusion and improved financial health.

To learn more about the QCash life event loan platform for your credit union, please go to