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Getting access to affordable borrowing affects social mobility and changes lives. But that access is restricted to those who are already socially mobile. So how do you build something that gives everybody equal access?
Equity is everything
If you’ve ever tried to move from renting a property to buy a property, you’ll know something about how difficult it is to get access to affordable borrowing. If you weren’t born into equity, have felt the instability of living pay check to pay check, know the fear of one unexpected bill spiralling you into debt, felt the weight of a single redundancy equalling immediate bankruptcy - then you know how a lack of access to affordable borrowing, even as a never-used safety net, can destroy mental health, strain families and erase futures. This is by design. The system of credit is a simply designed system of risk. The system asks the simple question of ‘what is the chance this person will pay this money back’ and through an opaque series of automated decisions makes a gamble. It makes that gamble based on what it knows about you from the data it has amassed and too often that data is inaccurate or incomplete. Quantitive indexes without qualitative insight. It looks at the touch-points you make with the credit system, and judges you on those touch-points. For many people those touch-points are at a moment of desperation or immediate need.
You can’t overturn an entire industry. But you can try to level the playing field.
Removing the concepts of credit and credit scoring is as close to impossible as impossible can be. It’s ingrained in the financial systems we trust every day. Inequality isn’t a problem big enough to enable change - money talks, and money prefers less risk. What you can do though is give people a way to improve how their risk is perceived and calculated.