The Los Angeles Times reports that some critics say the two federal agencies have failed to adopt up-to-date, more sophisticated credit scoring models, which has a disparate impact on minority consumers.
These consumers' bills, mostly for expenses such as rent, utilities, and cellphones, don’t get reported to the national credit bureaus. Many are young and just starting out in their careers, and a disproportionate portion of them are minorities. Without a credit score, these consumers are more likely to be denied a loan and must either forgo borrowing or use alternative lending sources that charge higher interest rates.
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