The Broken Credit Score System: Arbitrary, Discriminatory & Damaging

In light of Moody’s move to downgrade our nation’s credit score—and the massive middle finger that the markets gave that move, this subject is appropriate and timely.

The credit score industry, led by the unholy trinity of Equifax, Experian, and TransUnion, is a dystopian farce posing as a fair measure of financial trustworthiness. These agencies hold a stranglehold over people’s lives, dictating access to loans, housing, and even jobs, while producing scores that are arbitrary, discriminatory, and riddled with errors.

Worse, the US credit score system eerily mirrors the social credit system of communist China, surveilling and punishing individuals under the guise of objectivity. As handmaidens to big banks, these bureaus perpetuate a cycle of exploitation that devastates lives and entrenches systemic inequities.

Credit scores, those three-digit numbers that supposedly define your financial worth, are built on a foundation of whimsy. The proprietary algorithms behind FICO and VantageScore, used by Equifax, Experian, and TransUnion, are opaque and ever-changing. One month, paying off a credit card might boost your score; the next, it could plummet because you "reduced your credit utilization too fast."

A 2021 Consumer Financial Protection Bureau (CFPB) study revealed score discrepancies of 50 points or more across bureaus for the same individual, exposing the system’s inconsistency. How can a metric be trusted when it varies so wildly depending on which agency runs the numbers?

The arbitrariness extends to penalizing sensible behavior. A missed medical bill due to a clerical error? Your score takes a hit. Kept your credit card balance low but didn’t use it enough? That’s a penalty, too. The system rewards gaming its rules—maintaining just the right debt balance—over genuine financial responsibility. It’s a rigged game where the goalposts shift without warning, and the bureaus profit from the chaos.

In a chilling parallel, the US credit score system functions as a de facto social credit system, not unlike the one enforced in communist China. Both systems assign numerical values to individuals, dictating their access to opportunities based on opaque criteria. In China, social credit scores punish behaviors like jaywalking or dissent; in the US, credit scores penalize missed payments or low credit utilization, often reflecting circumstances beyond one’s control, like job loss or medical debt.

Both systems rely on mass surveillance—credit bureaus amass vast t