Abstract:
Credit scores have become a near-universal financial passport for
Americans to meet common personal needs including employment, loans, insurance, and home and car purchases or leases. At the same time, Elizabeth
Warren and others have documented the horrific economic, emotional, and
health consequences of low creditworthiness for score-bearers and their
families. Individuals with psychosocial disabilities (previously called mental
disabilities or mental illnesses) can make disastrously poor financial decisions
during the active phases of their conditions; during inactive phases they are as
capable as others of making sound or poor financial decisions. Yet, in
computing credit scores and selling credit reports, national and transnational
credit-reporting agencies (like Equifax) do not account for the implications of
psychosocial disability. Worse, evidence shows that businesses rely on these
reports to predatorily target borrowers with psychosocial disabilities—and
especially those who are also women and racial minorities—in deciding terms
of lending, employment, and housing. In theory but not in practice, the
Americans with Disabilities Act and the Fair Housing Act each prohibit
discriminatory financial decisions arising from disability status, while also
requiring reasonable accommodations to equalize opportunities for disabled
persons. The United Nations Convention on the Rights of Persons with
Disabilities (which the United States has signed) further mandates enabling
the financial decision making of these individuals, but does not provide
guidance on achieving this obligation. Further, despite the crucial and direct
implications this situation also raises for vast numbers of Americans without
psychosocial disabilities who likewise make poor credit decisions, it has not
undergone legal analysis. We engage this significant gap by suggesting
schemes drawn from historical and comparative contexts that could enable the
creditworthiness of persons with psychosocial disabilities, and then critiquing the costs and benefits of each. In doing so, we proffer the first analysis of this
issue in the legal literature and seek to stimulate future dialogue among academics
and policymakers. The Article concludes with thoughts on the implications of its
analyses for the broader issue of credit scoring.
