Expanding the Use of Credit Reports and Credit Scores: The Need for Caution and Empiricism. The Yearbook of Consumer Law 2008 Introduction With the globalization of the consumer financial markets, increasing attention is being paid to the use of credit reports and credit scoring to determine which consumers should have access to credit and the price they should pay for the credit they obtain. Also, automated underwriting and the securitization of consumer receivables have both increased reliance on, and the impact of credit reporting and credit scoring. Unfortunately, in nations such as the United States (US), where there are robust credit reporting and credit scoring Systems, deep flaws exist in how these Systems operate both to award and price credit. Although there have been some efforts to ameliorate these issues through alternative approaches to both reporting and scoring and the creation of an entirely new scoring model, the problems have not been resolved - at least not sufficiently. Despite these concerns, there has been an expansion of the use of credit reporting and credit scoring to arenas beyond credit. Increasingly, these Systems are being employed to determine access to, among other things, insurance and employment. Unfortunately, this expanded application of credit reporting and scoring exacerbates the already existing concerns about how these Systems operate and, as such, multiplies the opportunities for unfair treatment of whole Segments of the population. This essay is an effort to explain these risks and to urge caution before we make an existing problem worse through its application beyond its origins. In short, we are compounding concerns when insurers and employers make important financial and other life choices for our citizenry based on existing approaches to credit reporting and credit scoring. […] ID: 40459 Author(s): Gross, Karen. Publication date: 01/01/07

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Created: 12/11/07. Last changed: 12/11/07.
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