Your Credit Score Isn't a Reflection of Your Moral Character. But the Department of Homeland Security Seems To Think It Is. (slate.com)

What kind of person racks up debts and doesn't pay them? Your credit score is an attempt to answer this question. A report elaborates: These important three-digit numbers summarize our statistical risk for lenders. The allure of the credit score is its clarity: It cuts through appearances and converts our messy lives into an easily readable metric. The difference between a score of 750 and 600 is obvious. One is an excellent bet for a lender to make; the other is not. On balance, credit scores have made borrowing more convenient, and fairer, for consumers. But the U.S. Department of Homeland Security wants to use credit scores for an entirely different purpose, one they were never built for and are not suited for.

The agency charged with safeguarding the nation would like to make immigrants submit their credit scores when applying for legal resident status. The new rule, contained in a proposal signed by DHS Secretary Kirstjen Nielsen, is designed to help immigration officers identify applicants likely to become a "public charge" -- that is, a person primarily dependent on government assistance for food, housing, or medical care. According to the proposal, credit scores and other financial records (including credit reports, the comprehensive individual files from which credit scores are generated) would be reviewed to predict an applicant's chances of "self-sufficiency." The proposal is open for public comment until Dec. 10. Setting aside the proposal's moral abdication when it comes to the needy, we should be troubled by another injustice: its abuse of personal metrics.

Comments

Assumtions galore

[magarity]

Does this assume that the country from which the immigrant originates is sophisticated enough to have credit scores? Does it assume that an immigrant already in the US and applying for citizenship already has a work authorization and is building a US credit score?

Re:Assumtions galore

[Freischutz]

Does this assume that the country from which the immigrant originates is sophisticated enough to have credit scores? Does it assume that an immigrant already in the US and applying for citizenship already has a work authorization and is building a US credit score?

Look on the bright side, this only lasts until you become a citizen. Once you are a US citizen the reflection of the content of your character that is your credit history becomes so completely unimportant that even a man who has bankrupted six casinos, welshed on god knows how many loans leading to him being treated as a leper by the entire world banking system except Deutsche bank and Russian Mafia owned money laundering factories masquerading as banks, a man who has been convicted of money laundering, cheating people out of their hard earned money with a fake university and is currently being investigated over his fake charitable foundation can become president. If DJT's credit history was an accurate reflection of the content of his character he should be a cloak wearing Sith lord with, dead eyes, pale wrinkled skin like a Shar-Pei that can lift tanks whit his mind and shoot lighting from his fingertips and not the mere sleazebag hack that he is.

Re:Assumtions galore

[Gavagai80]

Many people have no credit scores simply because we don't borrow. I have no credit score because I've never felt like spending more than I have. But that actually does identify me as poor and as a bad consumer -- the middle class and wealthy always have debts for their houses and cars, whereas the responsible poor may never experience debt.

Re:Assumtions galore

[Baloroth]

Never borrowing is not really a good sign of financial responsibility. Aside from the fact that using credit cards that you pay off every month actually gives you money (through rewards programs*), borrowing money for expensive purchases you could not otherwise directly afford can allow increased financial opportunities you'd not otherwise have. Taking out a mortgage to buy a house in an area where prices are rising, then selling it later. Or taking out reasonable amounts of student loan debt to get a degree that allows you to find better paying jobs. Even taking out a loan for a car allows you to take jobs you'd otherwise not be able to get to at all.

*You could argue that if people didn't use credit cards, everything would be cheaper (since merchants wouldn't have to pay credit card fees) and so it's a net negative for consumers. While that may be true, given credit cards do exist and are widely used, not using them yourself to gain rewards is financially irresponsible, since costs are the same to you whether you pay cash or not.

Re:Assumtions galore

[ShanghaiBill]

I have no credit score ...

Yes you do. You may not know what it is, but if you are an adult in America, you likely have a credit rating.

... because I've never felt like spending more than I have.

That is NOT the only reason to have credit. You should apply for credit and establish a track record of handing it responsibly. Otherwise, someday you are going to want to borrow to buy a house or pay for your kid's college, and the answer is going to be "no".

Get a credit card with a $500 limit. Use it. Set auto-pay from your bank account so you never miss a payment and never pay a cent in interest. After a year, ask the issuer to raise the debt limit.

If you want to be successful in life, you need to learn basic money management. If you have no credit line, you are doing it wrong.

Re: Assumtions galore

[backslashdot]

Except the founders of some of our best tech companies came from welfare or refugee families. In other words, if say we didnt allow Steve Jobs biological dad into the country because he was muslim we wouldnt have Apple. If we didnâ(TM)t like muslims from dirt poor third world countries like Bangladesh one of the parents of Youtubeâ(TM)s cofounders wouldnâ(TM)t have been in. If we didnt like refugees we wouldnt have allowed Sergey Brinâ(TM)s family in. If we didnt like people whose family would go on foodstamps we wouldnâ(TM)t have allowed one of Whatsappâ(TM)s cofounders into the country. And these are just the ones I know about offhand.

Re:Assumtions galore

[Memnos]

Hmm, I read the AC's comment as satire, along the lines of "A Modest Proposal" by Jonathan Swift. In other words, I think he may have been agreeing with you. No matter, since it's the internet, proceed immediately to the verbal evisceration phase.

Re: Assumtions galore

[edris90]

it was never supposed to be about financial responsibility supposed to be about honesty and personal integrity.those who to borrow are not willing to acquire things honestly after they have earned and paid for them and are willing to risk not keeping their word due to unforeseen edible circumstances to get what they want now. Creditors seek to make money through other people's hardships and bad judgment instead of through their own labor. Person who uses a lot of credit is going to be more proud to letting other people cover their mistakes. A person of integrity doesn't allow themselves to use credit because they know they haven't earned whatever it is there after yet. And therefore willing to sacrifice to maintain honesty

Re:Assumtions galore

[squiggleslash]

No, because that's not what's being asked. I did a double take when I read it too.

Generally speaking, immigration in the US has three stages: some form of temporary residency (examples would be a sponsored work visa, or a student visa), followed by permanent residency (a green card, given to people who want to live here for the rest of their lives), followed by citizenship.

The last is often thought of as the "easiest" to get because it just requires a test and a swearing in, but in reality it's the hardest because it needs the applicant to pass the other two hurdles first. The first is relatively easy, the second requires either a lot of money (hard for most of us), an employer who can demonstrate you're significantly more talented in a specific field than normal (harder than it sounds, this isn't the H1-B "Can't find anyone who isn't asking for a six figure salary we can't afford" test, though Melania Trump got in this way, so there's that), or marriage/family.

Before anyone points out otherwise, it's occasionally the case, though rare, that someone will immediately apply for a green card without spending any time in the US with which to get a credit record. My mother would be an example, I sponsored her green card shortly after I got my citizenship. But that's relatively rare, and means the information will be absent when the immigration authorities make a determination (so they'll have to ignore it), not that they'll divide by zero and dump a corefile.

Back to the proposal: What they're proposing to do is modify the test between first and second.

Now, the summary claims they're introducing a new "moral" test, but that's actually bullshit. Part of the green card requirements is that you're going to be able to support yourself, there's no risk you'll end up on government anti-poverty programs, and typically they send a stern letter to your sponsor making it clear they will be on the hook if you turn out to be a deadbeat. How enforceable that is is another question, but the principle - you should be able to support yourself if you want permanent residency - isn't new. And, to be honest, it's not even a bad one.

So... is using your American credit score, calculated on the basis of several years of living in the US, going to answer that question - notably whether you're capable of supporting yourself? By itself, no, but it certainly is reasonable for a government determining whether someone should be allowed to live here permanently should use information from your credit score as a part of that determination. If you're not paying your debts, then there's a high risk you'll not support yourself.

There are many concerns - punishing asylum seekers for seeking asylum by permanently stealing their children and placing them in torture camps being the most obvious (and to you shitty apologists itching to claim that because ICE separated a handful of families, suspected of child trafficking, during the Obama regime, this means it's normal or Obama's fault that the Republican regime has used it instead to deter asylum seekers by doing it to literally thousands of refugees, I sincerely hope you all die in the most painful way possible, you are utterly shitty people and the world would be better without you) - I have about the US immigration system right now. There is absolutely nothing whatsoever wrong with this proposal. It makes sense. Immigrants should be self sufficient. Using a credit score as a part of a determination for that is a perfectly reasonable way to help ensure that.

Re:Assumtions galore

[Kjella]

Never borrowing is not really a good sign of financial responsibility.

It depends on how and why, if you're living in a rented apartment in a big city where your daily needs are met by public transportation there's no inherent reason you should have a loan. Yes, you could try to game credit cards but it's a hassle and the time and effort it takes could probably be spent on other cost cutting measures too like taking advantage of sales, cooking your own food, better maintenance of things you own and so on. Taking out a loan to speculate in property value is certainly possible, but the only guaranteed savings is being your own landlord. Would you really sell your house, even though it fits your needs and you've spent years furnishing and customizing it simply because you think prices have peaked? I doubt that, so the vast majority sit through both the ups and downs.

Loans that are proper investments with a ROI or long lasting items you essentially "write off" in your own bookkeeping make sense, like you're buying a car to drive for the next ten years but it has to be paid today. A mortgage in the "safe zone" of the property value (<60% around here) for a low risk customer should have a <1% post-inflation interest, that's a small price for having the money now rather than later. What I don't understand are the people who owe like 1-2 paychecks, zero safety buffer and pay >10% interest. In all but the most dire circumstances I'd cut back enough to get out of that red zone, both for my own peace of mind and the savings. But I've got a friend who's constantly living on credit and he's got this huge urgency of things he'd like to spend money on and is only waiting for the paycheck to come in. I simply think he doesn't worry, tomorrow's problems can be fixed tomorrow.

Re: Assumtions galore

[ColaMan]

I disagree Noah.

In essence with loans and credit cards you are borrowing money from your future self to use now.

Seeing as we don't have a time machine to collect payments from you-in-the-future to give to you-right-now as a lump sum, we have banks and such to help facilitate this, and yes, they take their cut because they provide a service.

The test of character is between future-you and you-right-now. Right now, you hope that future-you will pay up so that you can buy that house, or whatever. If future-you doesn't pay up, you're being dishonest to yourself because they made an agreement with you-right-now. Because we don't have that time machine, there will also be a whole mess of trouble with banks and so on, who also trusted future-you to pay up.

So, can you trust future-you to pay up, given the amount you're borrowing and your current and possible future circumstances? That's the question you need to ask when you borrow from your future self, and the answer depends on how well you know and trust yourself and very little else.

Re:Assumtions galore

[meerling]

You don't seem to understand a number of things involved here. I'll point out just a small selection of things you've overlooked or apparently don't understand. We aren't bringing them in, they are bringing themselves, so we don't get to pick and chose from another countries elite, we have to accept or deny from the pool that is making itself available.
Second, they are immigrants. This means that things have gotten bad enough for them where they live they are willing to give up their homes, which may be ancestral, their extended families, their friends, their entire lives, to go to someplace where they think things will give them a better chance at life.
The rich, the powerful, and those that are reasonably comfortable are almost never immigrants.
Immigrants tend to come from places of turmoil where life isn't all that sure. Maybe it's because of a corrupt government, or out of control crime, an ongoing war, suffering from famine, or any of a thousand other horrible situations. Those kinds of places don't have good credit scores for most of the people, if any.
Then there's the entire thing about opportunity. We have far more opportunities for people to prosper than exist in those places of turmoil. Try making a living as a doctor in a country where the hospitals keep getting blown up and if you even get a paycheck every couple of months for a weeks work you're lucky. Or a writer where nobody can afford to buy the books. Those people will also look horrible on a credit check, and yet they can certainly thrive in a place like the US. Then there are all those other people who can also do great here, but couldn't in their own country because of lack of opportunity or other issues. Among them is being too damn busy dodging the press gangs of both the government and the rebels or criminals trying to bolster their forces. You just have no idea WHY their credit looks like shit, other than the fact that they have just left their homes, and possibly a large chunk of their assets they couldn't bring with them (real estate among them) to go to another country. Did you know that doing such a thing is a BIG hit on your credit score?

Hell, if you want to base their eligibility on their credit score, you might as well go by penis length and breast size since you think they can always fall back to making porn.

Re:Assumtions galore

[gtall]

Ah, the old "my guy's bad but what about yours?" argument. Regardless of Hillary's sins, your guy remains a grifter.

Re:Assumtions galore

[Gavagai80]

Never borrowing is not really a good sign of financial responsibility. Aside from the fact that using credit cards that you pay off every month actually gives you money (through rewards programs*), borrowing money for expensive purchases you could not otherwise directly afford can allow increased financial opportunities you'd not otherwise have. Taking out a mortgage to buy a house in an area where prices are rising, then selling it later. Or taking out reasonable amounts of student loan debt to get a degree that allows you to find better paying jobs. Even taking out a loan for a car allows you to take jobs you'd otherwise not be able to get to at all.

You don't need to take out a loan for a car if you're not living paycheck to paycheck. You can get a car for $1000 or less, and it'll get you to the job just as well as that shiny Tesla. My car's resale value is probably about 50 cents with all the impact damage, but it's quite reliable. Note I'm not saying there's anything wrong with taking out a loan for a car -- if you have a large income but low savings and want a luxury car, feel free, but don't pretend you need that to get to work.

Flipping houses is obviously an activity for the middle class and rich, and thus has nothing do with the responsible poor scenario I was detailing. In fact you're making my point: rich people borrow more, because they make money borrowing. So-called good debt is an option for them. Responsible poor people borrow less, because they don't get approved for mortgages and tend to be the ones whose lives are destroyed by escalating payday-style loans when something prevents them from paying it back. Why take that risk until you have to?

With credit cards, once again, the kind of credit card a rich person can get approved for offers considerably better deals than the kind a poor person is likely to be stuck with. I applied a couple times but was of course rejected due to no credit history and low income, so I shrugged and accepted the loss of a few dollars of rewards. If you're poor, you're not going to rack up air miles points anyway. And at any rate my visa debit card offers some rewards.

Re:Assumtions galore

[grep -v '.*' *]

I simply think he doesn't worry, tomorrow's problems can be fixed tomorrow.

Live today, because you never know what tomorrow brings

Ummm, you realize you've got your answer in your own tagline, right?

Mod headline flaimbate

[Anonymous Coward]

TFS says nothing about "moral character".
Furthermore, no argument is even being made here that there is no correlation between credit score and likelihood of becoming a public charge. The writer just doesn't like the proposal.

China vs US

[PopeRatzo]

Yesterday, we saw an article about China's "social credit" policy, and there was much outrage and gnashing of teeth and moral superiority. People were all like, "why do we do business with China?" and so forth.

Someone please tell me how this is different from China's social credit policies.

Re:China vs US

[drinkypoo]

Someone please tell me how this is different from China's social credit policies.

This number is generated by corporations who don't give a shit about you and would happily kill you and sell your organs instead of by a government that doesn't give a shit about you and does happily kill people and sell their organs already. Toe-MAY-toe, toe-MAH-toe.

Re:China vs US

[PeeAitchPee]

Nonsense. Credit scores are used to assign a risk to a borrower. The higher a person's credit score, the more likely it is that they will pay back what they borrow. Unlike China's "social credit," credit scoring is is rooted in real actuarial science. We've already seen what happens when credit scores and the like are ignored and money is just lent out to anyone regardless of their ability to ever pay it back (the mid-2000s housing crisis, and today's student loan crisis) just because "it's the right thing to do." It is a bad thing financially for the country (any country, not just the US) to import a bunch of dependents who are statistically highly unlikely to be able to provide any value to society beyond "diversity." Unlike previous generations of immigrants, there are very few opportunities for unskilled laborers in the United States. If you are hellbent on bringing them here, you better have a real plan for paying for them.

Re:China vs US

[PeeAitchPee]

Credit scores are nothing more than applied actuarial science. Like most science, it "doesn't give a shit about you." You may hate the way companies use it, but it's a number backed by real science which simply indicates the likelihood of a borrower to pay back what they borrow. That's it. Perhaps the more important question for society is why are these big corps and even parts of the gov't still allowed to trap people in debt by lending out money they know can't be paid back?

Re:China vs US

[owlaf]

Interesting the score doesn't reflect when someone is frugal enough most of the time they don't need credit cards or loans. My dad took out a loan on a motorcycle for the reason to get his first credit card. He had borrowed so little and been a number of years, he couldn't get a card.

Re:China vs US

[guruevi]

If you were a legal migrant you would know that the DHS (INS) already looks at your self sufficiency before allowing you entrance. That is a process that can take up to a year to complete, making it easier by taking a statistical predictor of success and self-sufficiency makes the process easier.

As a legal migrant, your life is fully vetted before entry, integration into American culture, diseases (you need to submit full birth and medical records and have an American doctor vet you personally), criminal activity predictors and self sufficiency (income, savings and a social network) predictors are some of the biggest things they look at. Hence why illegal immigration is such a big issue (feelings of unfairness) across legal migrant populations (including Hispanics).

Re: China vs US

[jenningsthecat]

We've already seen what happens when credit scores and the like are ignored and money is just lent out to anyone regardless of their ability to ever pay it back... just because "it's the right thing to do."

Nope. Banks lent money to people they shouldn't have in order to resell those loans to other banks as AAA first class debts. It was a scam run by thieves that we are all still paying for. Well, everyone except the bankers are still paying for it.

IIRC, banks didn't merely lend money to such people, they actively encouraged them to borrow. Weren't there even incentives for bank personnel to lend as much as possible?

Re:China vs US

[Entrope]

Having a low credit score -- or even no credit history -- will not prevent you from buying plane or train or bus tickets in the US. It will only prevent you from getting a credit card to buy a ticket on credit.

Having a low social credit score -- and having none is not an option -- can prevent you from buying those tickets in China.

If you're going to spout such garbage, you should at least make it obscure enough that it isn't immediately obvious as garbage.

Moral character?

[Anonymous Coward]

Is there a correlation between credit score and being dependent on welfare? Yes, there is a negative correlation. As the credit score decreases, the likelihood that the person is on welfare increases.

So if as a matter of policy a country wants to take in fewer people who will be dependent on welfare, then credit score is a reasonable data point which could help with that.

I could understand a country making policy that they don't care whether the people they take in are dependent on welfare, in which case credit score perhaps shouldn't factor into their equation, but that's just a matter of policy; there's nothing wrong with using credit score or any other data point to achieve whatever policy goal you want.

In other words, argue the policy. Should we or should we not care about immigrants getting dependent on public welfare?

There are interesting moral and financial arguments here. But zeroing in on credit score specifically is a waste of time.

Re:Moral character?

[UnknowingFool]

The problem with a credit score is that it relies on a history of borrowing. When related to immigrants, many of them have lower credit scores simply because they don't have a verified history of borrowing. Many immigrants use cash and when they borrow it is with friends and family and not institutions. Using a credit score to judge whether immigrants will go on welfare is flawed in this regard.

Re:No they don't

[PeeAitchPee]

Your credit score (vaguely) indicates whether you earn a paycheck, are self sufficient and pay your bills.

Not exactly. Your credit score indicates how likely you are to pay back what you borrow -- that's it. It's perfectly possible (and sadly common) for people that make a lot of money to be terrible borrowers and default on loans, or declare bankruptcy, etc. Conversely, it's also possible to make a rather modest paycheck but have a high credit score -- those are usually the people who never forget to pay a monthly bill, don't run a credit card balance, etc. Finally, you have to actually borrow money every once in awhile and pay it back to really build your credit score. That's how you "prove" that you'll actually pay back what you want to borrow, and why banks look very carefully at your credit card payment histories, etc. They literally have this stuff (managing financial risk) down to a science.

Yep, total flamebait

[raymorris]

Indeed, total flamebait.

The proposal (which may be bad or good, that's for another post) is:

Try to estimate the likelihood that the person will becime financially dependent on the taxpayers, by looking at their finances.

It's nothing about moral character. THIS proposal is about the financial cost to tax payers. How many financially dependent people we want to bring in is a related, though different, discussion.

Financial dependence isn't "moral character". My daughter is 100% dependent on me financially*. She has high moral character. She's four. The headline is crap.

I suppose someone *could* make the argument that having a habit of borrowing money and not paying it back is a moral weakness, but the authors of the proposal make no such statement. They argue that people who are financially a mess are more likely to become a drain on the tax payer.

* My four year old daughter regularly asks for jobs she can do to earn money for extra toys.

Re:What if one has no debts?

[guruevi]

Credit scores exist without having a credit card. Open a bank account and you have a credit history which is practically global (banks operate these metrics across continents) except for some third world countries.

If you have no bank account it will be pretty hard to get legal immigration into the US; it's a rather expensive process and US Embassies don't necessarily accept those amounts in cash.

Wrong Source for Fair, Wrong Topic for Slashdot

[Fringe]

This seems out-of-place for two reasons.

1. Slate is for open borders and pretty much every far left cause, only bested by Salon in bias of major outlets. Of course they'll object to anything designed to filter, restrict or vet immigrants. Especially on merit, despite the strict rules Canada has doing precisely that.

Take this sentence opening: Setting aside the proposal’s moral abdication when it comes to the needy. That's not about technology or misuse; the author is advocating specifically for taking in the immigrants least likely to have decent credit scores.

2. This seems more appropriate for reddit than Slashdot. It's not really a nerds- or a tech-focused issue. The focus of the article (other than that our obligation should be to provide unlimited access to those who may become a burden) is that any metrics are wrong because they de-humanize the situation. Which is precisely the point of the metrics, and allows us to handle larger volumes than otherwise, but Slate considers everyone a special case, so metrics are just wrong donchaknow.

Let's not overly politicize /.

Not exactly

[rsilvergun]

most of the defaulted loans weren't on people's primary residences, they were on investment properties. That's what made the crash so bad. You had everybody and his grandma try to get into house flipping to make up for their pensions going *poof*. Those people were generally still working and had excellent credit. So they would have no problems borrowing the money.

The real trouble is that people couldn't afford to buy a house that'd been flipped 7 times and had $100k added to it's original, $200k actual value. Or worse to rent that house out for $3k/mo so the schmuck who bought it with his maxed out 401k could make their money back. The young'uns ("Millenials") just don't make as much as their parents (let alone their grandparents).

What made 2008 so nasty is that all those folks just walked away from the properties. Since they were mostly rentals and flippers they didn't go out of their way to keep them.

The part that's infuriating is that almost nobody talks about this. I only know about it because a few left wing news outlets covered it.