Kamala Harris Tries to Solve One Problem By Creating Another

Democratic Senator and presidential primary candidate Kamala Harris (who has recently rediscovered her roots just in time to banish Joe Biden into the Shadow Realm) has recently offered a proposal designed to help potential black homeowners.

But one piece to this puzzle has started to get some light shone on it: specifically the part where Harris says that credit scores should include rent, cell phone and utilities:

There are an estimated 26 million people who are “credit invisible” and another 19 million who are said to have “unscorable” files, according to the Consumer Financial Protection Bureau. These people don’t have enough bank or credit-union accounts to have a credit score by today’s standards.

While the traditional FICO score, named after the Fair Isaac Corporation FICO, +0.31% mainly considers payments on debt such as credit cards, mortgages and auto loans, the credit scores have always been designed to consider telecommunications and utilities payments since they were first released in 1989, said Joanne Gaskin, vice president of scores and analytics at FICO. The latest version of the credit score, FICO Score 9, is also designed to incorporate rent data.

The article does mention that Republican Senator Tim Scott and Congressman Keith Ellis introduced compatible, bi-partisan bills in their respective chambers in 2017, but Harris wasn't involved.

Also, as promising as it sounds, there are some concerns:

However, others have argued that the added data alone may not be much of a game-changer in terms of creating a new pool of potential home buyers. The 2018 legislation, for instance, didn’t require lenders to abandon the traditional FICO score altogether. As a result, some argued lenders may choose to ignore the alternative scores or, if they used them, consider those borrowers to be riskier and thus charge them a higher interest rate.

Others have also suggested consumers’ credit scores could potentially go down if this additional data is added in earnest to the calculations. For instance, utility companies can already report late payments to credit bureaus, but typically only do so after several months have passed. If utility companies were obliged to report all consumer payment information to the credit reporting agencies, consumers could be dinged for a single late payment, even if they quickly resolved the situation.

I would add that adding "rent" into the mix could be problematic; not everyone who rents lives in an apartment owned by some corporation. People stay/live with families and friends, people sub-lease and then we have whatever people who are in-between work, moving or in school are doing. Not everyone who rents has everything documented, and that applies to both parties. And with the likelihood that the credit score will be linked to a certain rent price...well, I can only imagine the conversations that will be held if either side starts arguing for an adjustment, let alone where those conversations will lead.

Let's get one thing straight: the main reason home-ownership is such an obstacle for African-Americans is that racist policies where baked in the cake years ago, and they still resonate today.  Making it easier to have a down payment on a $400K or $500K home is nice, but what happens when that outrageous mortgage (this proposal doesn't seem to talk about the future homeowner's income or employment) is due every month? What's going to prevent the (most likely white) affluent members of these communities from moving out? What's going to keep funding flowing into the community for good schools, libraries and the like?

Harris' proposal is typical for the neoliberal Democrat: use financing to solve social woes. Redlining caused this problem, and anti-redlining legislation would be the best way to resolve it.