Frederick F.Wherry, Kristin S.Seefeldt, and AnthonyAlvarezCredit Where It's DueNew York: Russell Sage, 2019. 159 p.

Abstract

It is hard to imagine life in the contemporary United States without a credit score. Renting an apartment, buying a car on installment, and often even finding a job requires a credit score. A higher credit score results in credit at more favorable terms; a borrower with poor credit score may pay as much as extra $70,000 over the life of a home mortgage of $100,000. We assume that most people have a credit score and individuals who have a low credit score have made some poor decisions in their life by not paying their credit card bills or other loans on time. Wherry and his colleagues present startling statistics. They show that an estimated 45 million adults in the United States lacked a credit score in 2010—either because they had no credit history or they had too few credit lines to be scored. The burden of being credit invisible fell most harshly on Blacks and Latinx adults (28 percent in both cases) compared to whites and Asians (16–17 percent). “Giving Credit Where Credit is due,” a mantra of modern credit justice activists, requires consensus on who deserves it and why. Should credit, like political freedom, be a fundamental right for all adults? Or is credit a privilege best granted to those who have demonstrated themselves fit to use it, or at least disciplined enough not to abuse it? Authors of Credit Where It's Due, Frederick Wherry, Professor of Sociology at Princeton; Kristin Seefeldt, Associate Professor of Social Work and Social Policy at University of Michigan; and Anthony Alvarez, Assistant Professor of Sociology at California State University, Fullerton, argue that low credit score is part and parcel of a life lived on the margins of the organized financial world and not a function of conscious individual choices. The book is based on fieldwork conducted at Mission Asset Fund (MAF) which began as a nonprofit community organization in 2007 in the Mission District of San Francisco and seeks to enhance financial inclusion for minorities, immigrants, and low-income households and to create a fair credit marketplace for everyone. It documents financial trajectories that land individuals in a credit invisible situation where they are unable to obtain credit on fair terms and traces their struggle to get out of this predicament. While the authors’ diagnosis of what lands individuals in a credit bind is fascinating, highlighting poor starting points, diverse family and life demands, and student debt as prime culprits, it is the focus on solutions that is most interesting. Authors suggest several solutions for addressing the credit conundrum. They argue that Blacks and Latinx will never be able to catch up to their white counterparts simply by working at the same jobs, engaging in the same saving and investment practices, or getting the same education. Historical evidence shows that whites inherit over ten times as much wealth as their minority counterparts which allows them to build a credit history. The only way to bridge this gap is to consciously establish an investment account for every child born to a family with less than median income. This account will provide seed capital for their future financial security. They also propose short-term loans for every family that would protect families from getting into exorbitantly priced emergency or “payday” loans. This is to be supplemented by extending safety regulations and financial education to students taking college loans to ensure they do not fall into default. Although the focus is on low income Americans, some of the ideas in the book and solutions have interesting synergies with recent discussions on financial inclusion in the economic development literature. The premise of the book is challenging and pulls it in two different directions. On the one hand, it seeks to be an academic manuscript, trying to find a niche in the broader discourse on credit and financial stability. On the other hand, its value and impact come from its close link with one specific NGO focusing on equalizing the credit landscape. It is a challenging task to blend the two in creating a cohesive narrative and at times the authors struggle with it. However, the compelling storyline of the book allows readers to ignore this tension and remain engaged throughout the reading.