6 ms·

I agree that facebook's advertising practices allowed for illegal discrimination. A good case of "move fast and break things." Some journalists go farther thoug

I agree that facebook's advertising practices allowed for illegal discrimination. A good case of "move fast and break things." Some journalists go farther though, and suggest that even the concept of a credit score is racist. https://www.theguardian.com/commentisfree/2015/oct/13/your-credit-score-is-racist-heres-why https://www.theguardian.com/commentisfree/2015/oct/13/your-c... Consider the 2 possible worlds: 1. One in which disadvantaged minorities have poor credit because of their poor socioeconomic status. Once statistical controls are used to control for socioeconomic status, all ethnic groups are equivalent. 2. One in which, even after controlling for socioeconomic status, disadvantaged minorities still have worse credit than the general population. In both of these worlds, race can be used as a weak predictor of credit quality. Many of the moral claims made by The Guardian are absurd, and overly protectionist. >The insidious notion that our credit history speaks to our reliability as human beings is largely taken for granted. If you, as a business owner, had to choose to hire someone with a good credit score or a bad one, all else being equal, what would you choose? Conscientiousness and intelligence both correlate with socioeconomic status, both being good traits for a worker.

bearcobra 8y ago
As an owner, I don't know why the finances of my employee should be any of my business. Even in assessing credit worthiness, there are plenty of flaws with the current system.
- SamReidHughes 8y ago
  National security reasons if you're a government or contractor, and likewise financial security reasons if you're a corporation.
  - munk-a 8y ago
    The former is valid, the latter I disagree with strongly. Specifically... Too bad. There are costs and risks in employment and employees are exposed to lots of risks that can result in health issues, sudden termination (layoff) and a myriad of other problems, the slight risk an employer accepts when hiring new employees and investing in training absolutely can be offset by insurance (employers can get targeted insurance against key personnel departures and against sudden wave departures). So... too bad. Violating this layer of privacy yields nearly no business benefit and costs sanity.
    - praneshp 8y ago
      Is it typically free to invoke that insurance? Typically my driving insurance goes up if I make a claim. (Assuming someone stealing from you is not your fault)
      - munk-a 8y ago
        I can't answer this with confidence, I suspect it would go up if you made a claim similar to other insurances. Though car insurance is a weird racket so business interruption insurances may not be able to get away with it.
        praneshp 8y ago
        > Though car insurance is a weird racket Ha, I don't think I agree with you on the topic at hand, but this is something I'll get behind.
      - nimih 8y ago
        To the contrary, commercial insurance is often written to explicitly factor in the amount of claims that occur during the policy term, e.g. using retrospective rating[0]. Additionally, commercial underwriters typically have much more legal latitude in what they can consider when deciding whether—and for how much—to offer a policy contract: all states in the US have very strict rules about which sorts of claims can be considered when determining home and auto insurance rates for individuals (e.g. not-at-fault accidents and certain classes of weather damage are typically excluded)[1]. That being said, the brunt of the risk associated with a hiring decision lies with the employee in most situations (certainly in all the ones I’ve encountered personally working in retail and as a white-collar professional) in the US, and I would have to see some pretty startling numbers for an implied increase in insurance premiums to get anywhere near tipping that balance. [0] https://en.m.wikipedia.org/wiki/Retrospectively_rated_insurance https://en.m.wikipedia.org/wiki/Retrospectively_rated_insura... [1] NB I’m only familiar with US insurance regulation, so perhaps things work differently in other countries.
    - SamReidHughes 8y ago
brightball 8y ago
I've really never understood the point of using credit scores when hiring. I completely understand it when making decisions on actually loaning money, leasing agreement, etc...
- kingbirdy 8y ago
  If you're hiring someone who would have access to valuable information that could be sold, who would have information before the market, or who could potentially be paid to sabotage the company, it's important to ensure the candidate has good credit so they're less likely to do those things, since they at least wouldn't feel a financial pressure to do so and would only do it out of greed.
  - aaomidi 8y ago
    Is there direct evidence this is true or is it just a "common sense" thing that makes sense but might very well be false?
    - Kalium 8y ago
      Before I or others go looking for such, what would you consider an acceptable standard of direct evidence?
      - aaomidi 8y ago
        I honestly don't have an opinion on it. It just seems something that's repeated and accepted often and I'm being skeptical is all. I will probably look into it myself too! So whatever you can add to the discussion is great :)
    - kingbirdy 8y ago
      Do you mean evidence as to whether people with lower credit are likely to do such things against the company's interest? If so, I'm not sure. I just know it's something that is considered for govt purposes re: security clearances and that logic seems to carry over to private sector.
mAEStro-paNDa 8y ago
I'm not so sure that saying the concept of a credit score is racist is quite the same as saying credit scores perpetuate and reflect racial injustice/inequalities. Moreover, the article you cited isn't simply making moral claims, but specific examples. In addition, there is a well documented history of racial discrimination within the financial sector (see the Fair Housing Act).
fixermark 8y ago
ALL else being equal? I'd flip a coin. Because if all else is equal, the credit score (that indicates past interactions) isn't predictive of future outcomes. If we're assuming conscientiousness and intelligence aren't equal across these workers, that's a different story. In which case, it depends on particulars; I might take the one with the lower credit score because they've demonstrated willingness to take risks. But really, the issue is that credit score is a lousy predictor of work performance. I have no reason to believe it's actually correlated.
40acres 8y ago
A credit score is not racist because racism implies intent, however credit scores do disproportionately discriminate based on race and thus should not be used for hiring. Consider the fact that to access any form of credit, and thus a credit score requires a bank account. When you consider the racial disparities between those who are un-banked or under banked it's clear that a credit score disproportionately affects certain communities. Not only that, but credit ratings in general can be incredibly flawed. Many institutions had their bonds downgraded by the large credit rating agencies after the financial crisis simply due to the fact that balanced sheets were scrutinized more closely due to all the public outrage.
voldacar 8y ago
>>The insidious notion that our credit history speaks to our reliability as human beings is largely taken for granted. That's literally what a credit score is. A record of (financial) reliability. What an article

bearcobra 8y ago

As an owner, I don't know why the finances of my employee should be any of my business. Even in assessing credit worthiness, there are plenty of flaws with the current system.

SamReidHughes 8y ago
National security reasons if you're a government or contractor, and likewise financial security reasons if you're a corporation.
- munk-a 8y ago
  The former is valid, the latter I disagree with strongly. Specifically... Too bad. There are costs and risks in employment and employees are exposed to lots of risks that can result in health issues, sudden termination (layoff) and a myriad of other problems, the slight risk an employer accepts when hiring new employees and investing in training absolutely can be offset by insurance (employers can get targeted insurance against key personnel departures and against sudden wave departures). So... too bad. Violating this layer of privacy yields nearly no business benefit and costs sanity.
  - praneshp 8y ago
    Is it typically free to invoke that insurance? Typically my driving insurance goes up if I make a claim. (Assuming someone stealing from you is not your fault)
    - munk-a 8y ago
      I can't answer this with confidence, I suspect it would go up if you made a claim similar to other insurances. Though car insurance is a weird racket so business interruption insurances may not be able to get away with it.
      - praneshp 8y ago
        > Though car insurance is a weird racket Ha, I don't think I agree with you on the topic at hand, but this is something I'll get behind.
    - nimih 8y ago
      To the contrary, commercial insurance is often written to explicitly factor in the amount of claims that occur during the policy term, e.g. using retrospective rating[0]. Additionally, commercial underwriters typically have much more legal latitude in what they can consider when deciding whether—and for how much—to offer a policy contract: all states in the US have very strict rules about which sorts of claims can be considered when determining home and auto insurance rates for individuals (e.g. not-at-fault accidents and certain classes of weather damage are typically excluded)[1]. That being said, the brunt of the risk associated with a hiring decision lies with the employee in most situations (certainly in all the ones I’ve encountered personally working in retail and as a white-collar professional) in the US, and I would have to see some pretty startling numbers for an implied increase in insurance premiums to get anywhere near tipping that balance. [0] https://en.m.wikipedia.org/wiki/Retrospectively_rated_insurance https://en.m.wikipedia.org/wiki/Retrospectively_rated_insura... [1] NB I’m only familiar with US insurance regulation, so perhaps things work differently in other countries.
  - SamReidHughes 8y ago

brightball 8y ago

I've really never understood the point of using credit scores when hiring. I completely understand it when making decisions on actually loaning money, leasing agreement, etc...

kingbirdy 8y ago
If you're hiring someone who would have access to valuable information that could be sold, who would have information before the market, or who could potentially be paid to sabotage the company, it's important to ensure the candidate has good credit so they're less likely to do those things, since they at least wouldn't feel a financial pressure to do so and would only do it out of greed.
- aaomidi 8y ago
  Is there direct evidence this is true or is it just a "common sense" thing that makes sense but might very well be false?
  - Kalium 8y ago
    Before I or others go looking for such, what would you consider an acceptable standard of direct evidence?
    - aaomidi 8y ago
      I honestly don't have an opinion on it. It just seems something that's repeated and accepted often and I'm being skeptical is all. I will probably look into it myself too! So whatever you can add to the discussion is great :)
  - kingbirdy 8y ago
    Do you mean evidence as to whether people with lower credit are likely to do such things against the company's interest? If so, I'm not sure. I just know it's something that is considered for govt purposes re: security clearances and that logic seems to carry over to private sector.

mAEStro-paNDa 8y ago

I'm not so sure that saying the concept of a credit score is racist is quite the same as saying credit scores perpetuate and reflect racial injustice/inequalities. Moreover, the article you cited isn't simply making moral claims, but specific examples. In addition, there is a well documented history of racial discrimination within the financial sector (see the Fair Housing Act).

fixermark 8y ago

ALL else being equal? I'd flip a coin. Because if all else is equal, the credit score (that indicates past interactions) isn't predictive of future outcomes. If we're assuming conscientiousness and intelligence aren't equal across these workers, that's a different story. In which case, it depends on particulars; I might take the one with the lower credit score because they've demonstrated willingness to take risks. But really, the issue is that credit score is a lousy predictor of work performance. I have no reason to believe it's actually correlated.

40acres 8y ago

A credit score is not racist because racism implies intent, however credit scores do disproportionately discriminate based on race and thus should not be used for hiring. Consider the fact that to access any form of credit, and thus a credit score requires a bank account. When you consider the racial disparities between those who are un-banked or under banked it's clear that a credit score disproportionately affects certain communities. Not only that, but credit ratings in general can be incredibly flawed. Many institutions had their bonds downgraded by the large credit rating agencies after the financial crisis simply due to the fact that balanced sheets were scrutinized more closely due to all the public outrage.

voldacar 8y ago

>>The insidious notion that our credit history speaks to our reliability as human beings is largely taken for granted. That's literally what a credit score is. A record of (financial) reliability. What an article