All human societies are characterized by multiple interlocking systems of social stratification. U.S. society stratifies its members according to, among other things, social class, biological sex, race/ethnicity, age, and, many sociologists now argue, consumer credit score.

Do credit scores diminish the life chances of low-income people?

Consumer credit scoring creates “risk profiles” for consumers based on payment history, debt, length of credit history, number of new credit accounts, and types of credit in use.

Because credit scoring doesn’t take into account race/ethnicity, age (usually), marital status, or income, some argue that the system is fair.

A common argument is that if a person has a low credit score, it’s because of his or her own irresponsibility. However, this argument ignores the link between consumer credit scoring and social class.

Low-income people are less likely to be able to pay their bills on time—the most important factor in the scoring system.

They are also more likely to have high debt ratios relative to income than their high-income counterparts.

Some sociologists argue that the consumer credit scoring system is an emergent stratification system that diminishes the life chances of low-income people while enhancing those of high-income people.

Let’s explore what these sociologists mean.

Fran has recently graduated from college with her Bachelor of Arts degree. She has student loan debt. She is underemployed, working as a manager in a retail store while she tries to find a better job. Her parents are very emotionally supportive of her, though they have limited financial means.

Between 2009 and 2013, 45% of recent college graduates were underemployed. This means they worked in a job that did not require a Bachelor’s degree. 

Your student loan payment is due. Your mother’s car has broken down. She asks you for money for her car repairs so that she can get to and from work. (There is no public transportation in your town.)

You don’t have enough money to pay both bills.

you choose to repair your mom’s car, The student loan company has charged a late fee. Your credit score has also been lowered because you did not make the student loan payment on time. However, your mother is really grateful for your help.

You’ve been living with your mom since graduation, and it’s not your preferred situation. You decide to move out.

You find a perfect apartment. The price isn’t too high, and the complex even has a swimming pool.

However, because of your late student loan payment, your credit score has been lowered.

The landlord offers you the apartment, but only if you pay a $1,500 deposit. If your credit score were higher, you would have to pay only a $500 deposit.

You look for a different apartment

It turns out that all of the apartment complexes run credit checks and charge large deposits to people with low credit scores. In the end, the only apartment you can find that does not run a credit check is a rundown apartment in a bad part of town. When you move in, you have to have utilities turned on.

It turns out that utilities companies also run credit checks. Utilities customers with low credit scores are charged large deposits in order to have services turned on.

You end up skipping your next student loan payment to pay to have your utilities turned on, which further lowers your credit score.Over the past few decades, the consumer credit scoring system in the U.S. has spread to virtually all areas of life.

Initially used to estimate risk for banks giving loans, it is now routinely used by utilities companies, landlords, and even employers to rank applicants.Those with low scores may be denied housing, jobs, and other services.

In your spare time, you’ve been applying for and occasionally getting interviews for better-paying jobs at which you will actually use your degree.

You’ve finally been offered one of these jobs! You will be paid a salary instead of an hourly rate. The work is relevant to your degree, and the salary is adequate.

It turns out that the job offer is contingent on a background check, which includes a credit check.

I try my luck with the credit check.

I’m a little concerned that my future coworkers will somehow know about my low credit score, but I need this job, so I agree to the credit check anyway.

The job offer is rescinded

The job involves dealing with money, and the low credit score indicates to the prospective employer that you are a high risk for such a position.

Take a moment to reflect on the various choices you made in the simulation and their outcomes. one paragraph, discuss how both individual and societal factors influenced your decision making and how these decisions can be understood using sociological concepts.

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