The Credit Scoring Site A bleak account 

Federal Reserve tells 111th Congress that employers use credit scores

In 2010, Fed's statement creates a new low point. A comma tells the story.

April 26, 2010. Updated | By Greg Fisher

The Nonbelievers took another kick in the gut last month as a Federal Reserve official gave a highfalutin congressional testimony that employers[1] use credit scores. An Oxford comma is used in the written statement exactly as it is used within the same group of words on the website Wikepdia.

2007         A Federal Reserve study report, on which a subsequent article in a peer-reviewed journal is based, does not state that employers use credit scores. It states
Together, the three national agencies generate more than 1 billion credit reports each year. The vast majority of these reports are provided to creditors, employers, and insurers and individuals have also long been able to purchase a copy of their own report.
1/08 Somebody makes this addition to a Wikipedia article: "In the United States, in certain cases, insurance, housing, and employment can also be denied based on a negative credit rating." There is a comma before the word "and." The user disappears, making no other contribution to Wikipedia since that date.
4/08 The main three national credit bureaus claim that they do not provide credit scores for employment screening.
3/09 The Federal Reserve answers questions (sort of) about a claim regarding credit scores and employers it made (and continues to maintain) on its website.
9/09 The Journal of Consumer Affairs publishes a paper by Federal Reserve economists Robert B. Avery,[2] Kenneth P. Brevoort[3] and Glenn B. Canner.[4] The article contained the comma. The two surrounding sentences have no serial comma
Credit scoring is widely used to evaluate applications for credit, identify prospective borrowers and manage existing credit accounts. It is also used to facilitate decision making in other areas, including insurance, housing, and employment. The large savings in cost and time that have accompanied the use of credit scoring are believed to have increased access to credit, promoted competition and improved market efficiency.
3/10 Fed tells congress that employers use credit scores. Creating one more piece of contradictory fodder in the disagreement over the facts, on March 24, 2010, in a statement to the U.S. House of Representatives Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit,[5] Sandra F. Braunstein, director, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System claimed
Credit scoring[6] is widely used to evaluate applications for credit, identify prospective borrowers, and manage and price new and existing credit accounts. It is also used to facilitate decisionmaking in other areas including insurance, housing, and employment. The large savings in cost and time that have accompanied the use of credit scoring are believed to have increased access to credit, promoted competition, and improved market efficiency.
4/10 Despite (three more, logical) questions regarding the 2010 statement to Congress, the Fed's written testimony also remains on its website and in Congress's records, with no amendment.

The narrative went from "reports" to "rating" to "scoring".

The central bank provided no substantiation for its assertion regarding employers, however, "insurance, housing, and employment" is the exact phrase also found in an entry about credit history in the highly-esteemed Wikipedia. It would be easy to dismiss that as a mere coincidence if not for the Oxford comma - the extra one before the word "and" in a series. Each of the three sentences in the testimony's paragraph contains a series. But only the second sentence— the one with the statement about employers— has a peculiar extra comma.




By the time the Fed official turned on the microphone, the subcommittee chairman had turned over the gavel to a committee member. The verbal portion of the agency's testimony lasted less than 5 minutes and the hearing ended 8 minutes later. The witness answered no questions during the session, and subcommittee members failed, by the end of the hearing, to ask anything about the agency's claim about employers and credit scores.

Recently in Oregon, the governor signed into law a measure limiting the use of credit history in employment screening. Despite the denying statement of a consumer reporting agency, 17 minutes before the vote, in a speech on the floor of the Oregon House, a member said, "I ask for a yes vote because there is no correlation between credit scores and how someone will do a job!" No one challenged her assertion before the ballots were cast.

A Maryland state representative presented such a convincing case that the Associated Press couldn't help itself. Neither could the members of the Daily Kos who created 1101 comments on the premise of the delegate's post's compelling title: "Why Should Your Credit Score Prevent You From Getting a Job?"

The Federal Reserve says one thing, the Wall Street Journal (eventually[7]) and New York Times say another, and the credit bureaus talk out of both sides of their mouths. As for Equifax, TransUnion and ne'er-do-well Experian, it is either brilliant but[8] despicable[9] marketing, or just the usual ineptitude.

So who can you trust? Who do you trust? The FTC again lists credit bureaus in its top complaints list, and a Gallup Poll ranks the Federal Reserve Board as the lowest[10] among nine agencies and departments. The Department of the Treasury, the Federal Reserve's rival in providing oh-so-useful information to the public, may have a website and video with more bombast, but the Fed takes the top prize by submitting the words to a congressional subcommittee. In the hallowed chambers of the legislature of the United States of America, the employers-use-credit-scores meme has reached a new low— or high— depending on what the truth is.

Fed Chairman Ben Bernanke has not issued a statement regarding his organization's two statements.

If Subcommittee Chairman Representative Luis Gutierrez did not submit written questions about employers and scores, it's not like somebody didn't try to tell him about the disconnect. But, there is still a glimmer of hope. Standing-in for the chairman, Representative Al Green told the small contingent left in the hearing room that they had 30 days to submit their questions in writing. The deadline was Friday.

In a television appearance Saturday, on Fox Business Network's "Your Questions, Your Money,"[11] credit report expert John Ulzheimer of Credit.com said, regarding alleged credit score use in hiring decisions:[12] "I do not know how this happened. This has become the biggest misconception and myth that's continuing to propagate through the world of the media and supposed credit experts." To get to the bottom of it, the source of the Federal Reserve's comment is more important than its content. But the Fed isn't talking.

So, that's the latest story— this time from Washington— about how somebody gets away with flap-yapping with no evidence about employers using credit scores even while the credit bureaus say they don't provide them for that purpose. No, wait. Stop the presses. 1:20.




Update, 2016-04-26

  1. Previously linked to href="http://www.bankrate.com/financing/credit-cards/credit-score-myth-persists/
  2. Previously linked to http://www.federalreserve.gov/research/staff/averyrobertb.htm
  3. Previously linked to http://www.federalreserve.gov/research/staff/brevoortkennethp.htm
  4. Previously linked to http://www.federalreserve.gov/research/staff/cannerglennb.htm
  5. Previously linked to http://www.house.gov/apps/list/hearing/financialsvcs_dem/fihrn_03242010.shtml
  6. Previously linked to http://www.house.gov/apps/list/hearing/financialsvcs_dem/braunstein_testimony.pdf#page=8
  7. Previously linked to http://online.wsj.com/article/SB10001424052748703909804575123611107626180.html
  8. Previously linked to http://www.cnbc.com/id/34939810
  9. Previously linked to http://redtape.msnbc.com/2010/03/freecreditreportcom-forced-to-face-the-music.html
  10. http://www.gallup.com/video/121889/Americans-Opinion-Federal-Reserve-Board-Sours.aspx
  11. Previously linked to http://www.foxbusiness.com/our-team/on-air/your-money/index.html (also, see http://yourquestionsyourmoney.blogs.foxbusiness.com)
  12. Previously linked to http://www.credit.com/news/experts/2009-09-04/credit-scores-and-employment-the-final-word-finally.html

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