The End of Credit Scores? That’s What This Presidential Candidate Is Saying

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photo credit: Equifax

Hidden at the bottom of Sen. Bernie Sander’s plan for getting rid of America’s medical debt is a “footnote” of sorts of another financial upheaval–replacing companies like Equifax, Experian, and TransUnion with a public credit registry. 

Under this plan, a secure and public registry would use a transparent algorithm to determine creditworthiness.  Americans would be able to access their credit report for free, at any time, and their medical debt would not be included in the report. Another proposed change is to put an end to using credit scores for rental housing, employment, and insurance.

If no longer privatized, who then, shall be in charge of the free credit registry? The Consumer Financial Protection Bureau (CFPB), proposes Sanders.

The purpose of this extreme makeover is to make lending and access to capital more equitable for all Americans –especially minorities. 

According to several reports by the CFPB, the three major credit reporting companies have been involved in shady practices, including inaccurate reporting, selling misleading credit monitoring services, and selling scores to consumers that are not used by lenders for making credit decisions.

Worse still is the racial discrimination that the current credit model demonstrates. Black and Latino Americans are categorized as “high-risk” borrowers more often than white Americans, thus, making it difficult to secure rental housing and pushing up the cost of insurance. 

The CFPB has fined all the credit bureaus for these discriminatory practices several times in recent years. 

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