Sex discrimination and racial bias in credit assessment

Posted in 'Credit Score' by Barry Stamp

24 January 2012

Discrimination doesn’t raise its ugly head in credit assessment, thanks almost entirely to the wide use of credit scoring. It’s unlawful to incorporate any element into a credit scorecard that might prejudice the chances of getting credit because of race, colour, gender, sexual orientation, religion or any other bias.

Sometimes this works to the disadvantage of some groups. For instance, before equal opportunities legislation, women were scored more highly than men, because statistically they pose a lesser risk of default. Because of this, it was easier for women to get credit . When gender was removed from scorecards in the 1980’s, fewer women were accepted for credit as a result, but in effect the scorecards in use before equal opportunities legislation came into force were discriminatory against men.

One of the advantages of credit scoring is that it gives a consistent and fair result based on an evaluation of ‘characteristics’ such as time with bank – which is a measure of stability – and age – which is a very powerful predictor of bad debt.

You can check your credit score for free using our Free Credit Score service which calculates your credit score from questions that typically are seen in a credit application form. This type of credit score is known as an ‘application score’.

For a more accurate result, and to see how your score changes depending on which credit reference agency information it is based upon, and whether the lender has access to payment history data or not, by checking your Multi Agency Credit Report . This gives you 7 different types of credit score and each is explained in detail. You’ll be able to see how your credit score can vary depending on how it is calculated.

Our Multi Agency Credit Reports are free to trial for 30 days when you subscribe to our credit report monitoring service, and then cost an affordable £9.99 per month. You can cancel at anytime. Besides including 7 credit scores with each report, you also have the benefit of free identity theft restoration services if you subscribe.