The Credit Score Wasn’t Built to Be ‘Fair’

A system built to measure risk now operates as a barrier to basic rights—excluding millions from financial legitimacy before they even get the chance to participate.

There’s a number that follows you through adulthood. It doesn’t account for integrity, work ethic or intent. But it determines whether you can rent a home, get a car, rebuild after a crisis, or open a utility account without a deposit. For nearly 90 million Americans, this number is an obstacle to stability.

More than 40 million U.S. adults live with a poor credit score.

Millions more are considered “credit invisible” or have files too thin to generate a score at all. These are not anomalies. They are the expected outcomes of a system engineered to reward inherited access and penalize exclusion.

It’s a system that codifies inequality. Created in the 1950s to minimize lender risk, credit scoring was never structured to serve the public. Today, it functions as a gatekeeper to modern life. Landlords, employers, insurers, utility companies, and even dating platforms use the score to assess worthiness.

It’s a system that codifies inequality. To understand how, it helps to start with who built it.

The modern credit score traces back to 1956, when engineer Bill Fair and mathematician Earl Isaac founded Fair, Isaac and Co.—now known as FICO. Their scoring model was was designed to help creditors assess risk: a number that could quickly indicate how likely someone was to repay a loan. Holistic trustworthiness and lived realities were never part of the calculation.

Today, it functions as a gatekeeper to modern life. FICO’s algorithms now determine who qualifies for a mortgage, who gets a job interview, who pays more for car insurance and who is priced out of basic utilities. These scores are proprietary, largely unregulated and deeply resistant to public scrutiny.

Disparities in access are also glaring: Black and brown communities experience an average credit score gap of nearly 100 points compared to white-majority neighborhoods. Women navigating divorce or escaping abuse are often saddled with coerced debt or left liable for joint accounts. Immigrant families, gig workers and those outside traditional banking are routinely excluded.

The scoring model also omits the very transactions that define working-class survival. Rent, utilities and childcare rarely contribute to a score. A single medical bill sent to collections—sometimes in error—can erase years of financial consistency.

Low or absent credit status affects access to housing, inflates insurance premiums and adds fees to routine services. Individuals are penalized not for mismanaging credit, but for existing outside the model’s narrow definition of financial legitimacy. When damage occurs—through fraud, abuse or clerical error—the burden of correction falls entirely on the individual. Disputes drag on. Errors persist. Recovery is slow and often costly.

Reform efforts do exist, however they have been met with challenge in recent weeks.

A recent Consumer Financial Protection Bureau rule would have removed nearly $49  billion in medical debt from the credit reports of 15  million Americans. The policy was expected to boost average credit scores by around 20 points and result in about 22,000 more mortgages approved yearly.

However, as of July 11, 2025, a federal judge in Texas ruled that the CFPB had exceeded its authority under the Fair Credit Reporting Act and therefore vacated the rule, leaving millions vulnerable to a credit penalty for medical crises they often cannot control.

Despite public support for removing medical debt from credit assessments, lawmakers and courts have failed to protect consumers. The decision to strike down the CFPB's rule sends a clear message: preserving financial industry control remains a higher priority than correcting deeply inequitable systems.

Meanwhile, financial tech platforms have introduced alternative data scoring models. Legislation like the Credit Access and Inclusion Act, backed by the American FinTech Council, aims to broaden which behaviors are recognized as creditworthy.

But these solutions remain piecemeal and optional. The dominant scoring systems, for now, continue to operate behind closed algorithms, leaving those most affected with the least agency—because it is a model that was never designed with equity in mind.

Credit scoring needs structural redefinition. Transparency, public accountability and a reassessment of what financial reliability looks like are essential. Without these shifts, millions will continue to be judged—and limited—by a system that never considered them to begin with.