Jared Boyd

Jared Boyd is chief of staff and counsel for the City of St. Louis Treasurer's Office, which opened its Office of Financial Empowerment in 2014.

The median credit score in St. Louis is 665, just a few points beneath the national median. But a closer look at ZIP-code-level data shows a median score of just 532 in areas of the city that are predominantly non-white, whereas the median credit score for predominantly white areas is 732.

“That’s a very large gap, and we are here to do something about that,” said Jared Boyd, chief of staff and counsel for the City of St. Louis Treasurer's Office.

Boyd was specifically referring to how the office partnered with consumer advocates, financial educators and the FICO company to help community members "Score a Better Future” at Harris-Stowe State University on November 29.

“In today’s economy, one needs to be able to access credit on fair, affordable terms in order to purchase an auto, a mortgage,” said Joanne Gaskin, FICO's senior director for scores and analytics, “and so this is an opportunity [to] help people meet their financial goals [and] financial dreams in life.”

Boyd, who noted that his office opened its Office of Financial Empowerment in 2014 to “help people make better decisions with their money,” said that meeting community needs when it comes to money matters starts with financial literacy. But it also can’t stop there, he added.

“When we talk about helping people avoid payday loans,” he said, “we also have to talk about making sure they live close to a bank or making sure a credit union is available for them if they’ve had difficulty maintaining accounts.”

Gaskin emphasized that FICO was instrumental in “democratizing” access to credit about three decades ago and said that FICO scores – which use algorithms based on credit-bureau data – are used to inform more than 90 percent of lending decisions today.

“From a FICO perspective … when we look at the key ingredients for the credit score, we make certain to [avoid factoring in] race, income, wealth, geography – these are all very important from a fair lending perspective as well as equal opportunity,” Gaskin said. “We certainly would suggest that if there was bias in the lending decision, that that should be addressed by the regulators.”

She said people can improve their credit scores by making payments on time and paying down the full amount owed on revolving debt such as credit cards. “Payment history is 35 percent of what drives a consumer’s FICO score,” Gaskin said, and another 30 percent has to do with the total amount owed.

Gaskin said FICO Score 9 is the company’s “most predictive score,” which is “the score that is going to allow more consumers to gain access to credit.” She said it weighs medical collections less, ignores any paid collections on file – “and, importantly, includes rent to the degree that it’s available within the credit-bureau file.”

Boyd called the inclusion of rent-payment history a “promising” sign.

“For a lot of Americans who have been locked out of home ownership, it’s also the fact that you’re locked out of the ability to build your credit score,” he said. “So we have people in St. Louis and people in other places that have paid their utility bills, have paid their rent on time, and figuring [out] a way for FICO and other places to factor that in for benefit could help those people lower their bills.”

Reprinted with permission from news.stlpublicradio.org.

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