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Associate Professor of Sociology Tamara Nopper drew the attention of researchers and policymakers when she published an article on credit scoring, titled, “” (2020) and a chapter titled “Digital Character in ‘the Scored Society’” in the book “” (2019).

Based on her research, the U.S. House Committee on Financial Services invited Nopper to critique the current credit scoring system and alternatives to that system at a hearing held in 2021. This committee ensures that consumer protection laws are enacted and that no illegal, predatory and discriminatory practices are conducted in the financial marketplace.

Nopper sent in her written remarks, stating that the current U.S. credit scoring system is a “biased, broken system” dominated by three credit reporting agencies – Equifax, Experian and TransUnion. These agencies create credit scores based on an undisclosed algorithm and then sell their scores to lenders for profit, she says.

The credit scores they come up with play a substantive role in shaping our socioeconomic opportunities. Beyond credit card approval, credit scores determine if we’re able to get a small business loan, a loan on a house, a car and private student loans. 

At the same time, the system puts consumers at great peril: “There are credit reporting errors that put a great deal of burden on consumers to try to fix, often without fair resolution,” she says, “and there’s the relative lack of regulation of the credit scoring industry, particularly regarding transparency, data breaches and reporting errors.”

Furthermore, she argues, credit scoring disproportionately disadvantages Black and Latinx people. Nopper found that scores for these groups are significantly lower compared to white people and that a significant number of Black and Latinx people are “shut out of the credit scoring system due to being rated credit unscorable or credit invisible.”

“To lenders, no score or being unscorable equals high risk,” she says. “Such applicants are almost always rejected for credit.”

Nopper proposes eliminating the credit scoring system altogether. “Why do we spend so much time trying to rehabilitate a system that is exclusionary?” she asks. “Why is our economy built on taking out loans and taking on debt to meet basic human needs like housing, health care and higher education?” Nopper re-imagines an economy where housing is free or affordable, education is free and health care is universal.

“I appreciate having my research taken seriously by policymakers,” she says. “I encourage people to think about how to actually implement some of these things and what it could mean at the level of policy. The purpose of policy is to make things better and more humane for all of society.”

Nopper’s remarks are included in the (pgs. 90-97).