Credit Checks and how they are a barrier to housing is today's topic. The Seattle Renters' Commission has published a letter calling for City Council to enact an ordinance banning credit checks from rental applications. Is this possible? Yes. Will it take work? Yes.

The first thing to note is that we have become engrained to believe that credit checks are a necessary part of applying for apartments- that this is an industry standard. This is not true. Chances are your landlord did not have to submit a credit score for their first apartment.

The second thing is that we have been fooled into believing that someone's credit score predicts their ability to pay rent. Unless you rent at a corporate property and use the online rent portal, your rent payments aren't reported to credit bureaus (there are fees for this perk)

Credit checks were an awful housing practice before the pandemic. Now with Covid we are seeing greater economic disparity. "These economic consequences will not end when the pandemic ends... people are having to make difficult choices on what payments they have to defer."

In fact, most payments that people will need to prioritize are not factored into credit scores. "When going through hardship, most people will pay their rent before they pay their other debts because they do not want to lose their housing."

And then there is this other thing- Credit Invisibility. What is that? Well, simply stated, not everyone has access to a Credit Score.

Senator Tim Scott says "With gentrification and an increasing shortage of affordable housing, no one can afford to be 'credit invisible.'" https://www.cnbc.com/2018/05/18/credit-inequality-contributes-to-the-racial-wealth-gap.html

As the SRC states, if Seattle wants to address their history of redlining and restrictive covenants, credit scores are a great place to start.

Here are some examples of people who may be 'credit invisible.' This list not an exhaustive/complete list- young adults just leaving home, immigrants, the formally incarcerated, low-income families, victims of human trafficking, victims of DV, communities of color, LGBTQIA folk.

What happens when a landlord screens an applicant with no credit? It is pretty much considered the same as having poor credit. This is especially true when landlords use screening services such as On-Site to automate their application screening.

The Racial Justice & Equal Economic Opportunity Project published a whole report on Credit Scores roll in perpetuating past discrimination. "Past Imperfect: How Credit Scores and Other Analytics 'Bake In' and Perpetuate Past Discrimination."

contin. "Why do all of these studies show such racial disparities in credit scores? Is it because communities of color are somehow less responsible? Are there cultural differences? No... the explanation lies in the very nature of judging humans based on past behavior."

Credit is also built up by having assets. Assets come from buying power and also come from generational wealth. From the same publication- "African American families own less than seven cents for every dollar of white wealth."

Ok. So we've gone through all of these important factors as to why credit scores are an awful metric to use when determining someone's access to housing and it's already a mountain of damning evidence. Can you believe we haven't even gotten to Data Breaches and Inaccurate Data?

Credit data is actually wildly inaccurate! How we can allow people to approve and deny housing on a data point that is so often flawed and unsecure is just baffling! I'm sure we can all remember some data breaches. I'm sure some of us have had our identity stolen before.

Equifax: In Sept 2017 about half of everyone in the country had their personal information compromised from mid-May through July 2017. 145.5 million customer's Social Security numbers, birthdates and other data was at risk.

Listen. Big change is hard. And they've done a good job telling us that credit checks are the number 1 way that landlords can tell if they are getting a quality renter or not. But that's not true. Based on the above, I think it's safe to say credit checks are a bad predictor.

Landlords ALREADY do checks that answer that question! They are allowed to send reference requests to your previous landlord. They can ask:
1). $$ of rent
2). # times late
3). move-in/move out dates
4). damage reports/ # of legal notices/complaints