For many of us, a credit score feels like an inevitable part of adulthood. It determines whether we can buy a house, rent an apartment, or even get a job. But behind this seemingly neutral number lies a history deeply rooted in systemic inequality. To understand how credit scores shape our lives today, we need to uncover how they’ve evolved and the barriers they’ve reinforced.
The Origins of Credit Scores
Credit scores as we know them today didn’t exist until the late 20th century. Before their invention, lending decisions were often based on personal relationships, subjective judgment, and, unfortunately, discriminatory practices. In the 1950s, two engineers founded FICO (Fair Isaac Corporation), introducing a mathematical model to standardize creditworthiness. By 1989, the first modern FICO score was released.
While this system promised objectivity, it leaned heavily on data that reflected past inequalities. Payment history, credit length, and debt ratios are key factors in a credit score. For communities historically denied access to wealth-building opportunities—such as homeownership or fair employment—this posed an inherent disadvantage.
Redlining and the Credit System
The legacy of redlining—a discriminatory practice where neighborhoods with predominantly Black and Brown residents were labeled as “high risk”—looms large. These areas were systematically denied loans and investment, leaving families unable to build generational wealth. When credit scores became standardized, they carried the echoes of redlining forward. A poor credit history, often linked to systemic barriers, became a self-fulfilling prophecy.
In 1994, the Riegle-Neal Interstate Banking and Branching Efficiency Act allowed banks to operate across state lines, creating a national banking system. Credit scores became the tool to standardize lending decisions nationwide. While this streamlined the process, it also cemented disparities on a larger scale. Communities that were already marginalized faced new hurdles, now masked by the "neutral" veneer of a credit score.
Unfair But Not Illegal
The criteria that credit scores rely on often reinforce inequities. For example, “Do you have a long credit history?” rewards those whose families had access to credit for decades—a privilege often denied to marginalized communities. Similarly, “What percentage of your credit are you using?” disproportionately impacts those with lower credit limits, penalizing responsible usage by those with limited financial resources.
A Call for Change
Today, credit scores wield immense power over our lives. They determine who gets a chance to succeed and who is left behind, perpetuating cycles of inequality. Addressing this issue requires rethinking how we measure creditworthiness and acknowledging the systemic barriers many communities face.
Credit scores may seem like an impartial metric, but their history tells a different story. By understanding the roots of this system, we can work toward a more equitable future. Let’s question the systems we’ve inherited and push for change that benefits everyone.
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