Credit Restoration Series: Myth #6 Minorities Get Short Changed By Credit Scoring

Credit MythsThis is another common misconception, based upon long ago history.  Minorities are not short changed by credit scoring.

ECOA[3] (Equal Credit Opportunity Act) was put into place in 1974 to solve this problem. The law prohibits lenders from even asking the types of questions that would result in bias related to race, color, creed, sex, sexual orientation, and more, as well as people with little or no credit history.

The Bureau's claim that their scoring techniques have proven to be an accurate and consistent measure of the ability to repay loans for all people who have some credit history, regardless of whether they are in the main stream or have a minority history.

There is no scoring model that can distinguish race, color or creed based upon a name or it's spelling, where a person lives, etc.

So for all of you out there who consider yourself a minority, there is nothing to this myth.

Having said that, minorities may suffer from the methods the bureaus use to group people together.  It has nothing to do with race or any other marker, but what it is based upon is your score.  If people in the group you are in have a general lowering of their scores, it can affect your overall score.  This is common across all levels and has nothing to do with ethnicity.



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