Baltimore Study: Credit Scores

This report extends the original Baltimore study by adding credit score questions to the survey instrument conducted on the sample interviewed during Phase I.

As a new phase of the Baltimore study, the purpose was to contact the participants who responded to the Baltimore telephone interview and to request their FICO credit score. The new survey questionnaire added six short questions related to the respondent’s education.

This report focuses on the provided FICO credit scores and their connection to indicators of wealth among different groups of households: 1. Never-incarcerated white households (NIW), those in houses without an incarceration history identified as white; 2. Never incarcerated black households (NIB), those in houses without an incarceration history identified as black; 3. Ever-incarcerated white households (EIW), those in houses with an incarceration history identified as white; and 4. Ever-incarcerated black households (EIB), those in houses with an incarceration history identified as black.

The sample size is 51 respondents, with 5 respondents without a credit history.

Key Findings

• Individuals in households with an incarcerated history (ever-incarcerated) had the lowest average and median FICO credit scores. Their scores were about 250 points lower than white individuals in households with no incarceration history. The average FICO score by groups is 791 (NIW), 698 (NIB), 621 (EIW), and 572 (EIB).
• Most individuals have a checking account. The variation across liquid assets is mainly connected to holding a savings account. The group with the lowest likelihood of having a savings account is the EIW.
• Although it would have been expected that individuals with higher credit scores would have been more likely to have tangible assets such as a home or a car, in the case of black individuals and ever-incarcerated individuals, the analysis does not identify a significant change in the average FICO report when it is only estimated among individuals with tangible assets.?
• Despite having more holdings on assets and less debt, never-incarcerated blacks and ever incarcerated whites are not that different in terms of average FICO credit scores. Their difference is 77 points on average, which is less than half the difference between never-incarcerated and ever-incarcerated whites (170 points). The difference in average credit score between blacks never-incarcerated and ever-incarcerated is 125 points.
• There seems to be a segmentation of FICO credit scores by group. Never-incarcerated white households are concentrated around higher assets holdings and higher FICO credit scores while ever-incarcerated white households are concentrated around lower assets holdings and lower FICO credit scores.