The Trump administration’s latest attack on immigrants, a proposed rule that would punish families for accessing public benefits, has rightfully come under fire for its potential to threaten children’s health and impose financial hardship on households and communities. Under the proposal, the Department of Homeland Security could block green cards and visas for lawful immigrants who use, or are considered likely to use, essential family support programs. Across the country, there is already widespread evidence that merely proposing changes to the “public charge” rule is causing fear and confusion, deterring families from accessing basic necessities such as food, housing, and health care out of fear that their future in the United States may be put at risk. Business leaders, physicians, teachers, and food bank operators are among the groups speaking out against the prospective change.
But one part of the proposal has received less attention: a bizarre plan for officials to use immigrants’ personal credit information (credit reports and scores) as part of the assessment to qualify for a green card or visa. Using an irrelevant measure like a credit score to assess immigration status is not only absurd, it puts the federal government’s stamp of approval on the growing misuse of credit information that impacts all Americans.
Credit reports and scores were designed for a single purpose: as a tool for lenders to evaluate whether a would-be borrower would be a good credit risk. By looking at factors such as how much credit a consumer uses and their history of paying their debts, lenders decide whether to make a loan and on what terms. Credit reports contain no information about a consumer’s income or earnings and have no applicability to whether an immigrant, or prospective immigrant, is likely to become a public charge.
Using credit scores to determine immigration status is especially inapt because a significant factor in a credit score is the number of years a consumer has had and has used credit in the United States. As the National Consumer Law Center points out, this automatically disadvantages immigrants simply because they are immigrants and may not have been in the country long enough to develop extensive credit histories. Under this standard, immigrants would also be penalized if they have avoided taking on debt while living in the United States.
As illogical as the plan to use credit information to make immigration decisions is, it’s consistent with the decades-long push by the credit reporting industry to market and profit from the sale of personal credit information for a range of purposes where an individual’s bill paying history has little obvious relevance. Today, credit information is used by insurance companies, landlords, employers, utilities, and hospitals for a variety of economic decisions. Yet there is little indication that personal credit reports are any more relevant for say, employment, than they are for immigration. Despite many employers’ fervent wishes for a metric that could predict whether a job applicant would be a hardworking, honest, and punctual employee, there is no evidence that scrutinizing someone’s medical debt burden or student loan payment record will reveal their character or how well they will perform a job.
One reason to be skeptical about the use of credit reports for any purpose is their sky-high rate of inaccuracy. A comprehensive 2012 study by the Federal Trade Commission found that one in five American consumers (equivalent to more than 40 million people) had at least one error on their credit report—and there is little reason to believe that errors have declined since. The automated process of attempting to clear up credit reporting errors has been described by various media outlets as “a nightmare,” “a Kafkaesque no man’s land,” and “a horror story worthy of Hitchcock.” If that’s the situation facing typical Americans, consider the plight of an immigrant with limited English proficiency as she seeks to check and correct the accuracy of a document that may suddenly play a role in determining her family’s ability to remain in the United States. Credit reports are only available in English.
For all their errors, there is a feature of American life that credit reports and scores reflect with unsettling accuracy: the deep impact of racial prejudice and discrimination in the United States. While credit reports contain no information about a consumer’s race or ethnicity, and never formally take these factors into account, any look at an individual’s need to borrow or ability to pay back debt necessarily reflects the nation’s long history of racial inequality.
Generations of public policy that systematically locked people of color out of the wealth-building opportunities that advantaged white families have produced vast divergences in wealth along racial lines: In 2013, the typical white family had $134,008 in wealth, compared to $91,440 for the typical Asian family, and just $13,900 for the typical Latino family. The median black family possessed total wealth of only $11,184. These racial wealth gaps continue to impact who needs to borrow how much money to attend college, purchase a home, start a business, get a car repaired, or simply make ends meet until the next paycheck rolls around.
Research from the Federal Trade Commission, the Federal Reserve Board, and other investigators has documented significant racial disparities in credit history. Given decades of discrimination in lending, employment, education, and housing, it’s little wonder that black and Latino families remain particularly vulnerable to predatory lenders, and that their credit scores are still disproportionately likely to bear the scars. If the Department of Homeland Security adopts credit reports and scores as a factor in determining the fate of lawful immigrants, it will be embracing an assessment that clearly and unjustly disadvantages people of color.
Perhaps it’s fitting that the Trump administration, never known for holding facts in high esteem, is seeking to base determinations about families’ immigration status on a document as error-ridden and resistant to correction as a credit report. It certainly would not be the first time the administration has taken steps to reinforce the privileges and economic advantages of wealthy, predominantly white households. And while a mistake-filled, racially skewed metric like a credit report clearly has no place in deciding the fate of immigrants, it’s also worth asking why we allow it to play such a key role in determining the economic chances of Americans.
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