WE WERE INTRIGUED by a story we read the other day about a husband and wife in Detroit with a combined yearly income of $50,000 who have been unable to get a credit card from the Mobil Oil Corporation. The reason is that Mobil, like a lot of other credit corporations, uses geographic location as one measure of "credit worthiness," and the couple in question lives in an older, relatively poor section of Detroit. Mobil says that it divides the country into regions and can determine statistically in which regions people are more likely to default on credit. It says that its tri-state Midwest region, which includes Michigan, has a history of poor "credit experience." Other corporations acknowledge that they make similar judgments by using zip codes as an important test of a person's credit acceptability.
Now, it is true that the country has done much in the past few years to clean up unfair and arbitrary credit-rating practices. Through the Equal Credit Opportunity Act, a lot of flagrant credit discrimination has been identified and is on the way out. But the test of residential location apparently is still with us - and widely used. One reason is that the law does not prohibit discrimination on that basis. That's why the various federal agencies that regulate the credit corporations argue that they have no way to stop the practice - so long as it doesn't clearly take the form of discrimination against any one race or sex.
There is a particularly disturbing aspect to this problem - apart from the effects of this form of discrimination on individuals - and that is the area-wide effect, especially on inner-city neighborhoods. In practical terms, the determination of a person's entitlement to credit based on a region, a state or the location within a city is a form of "redining" - a term more often associated with discriminatory mortage lending, but applicable in this instance. At a time when local and federal officials are developing programs to get more people to live in cities - and in older neighborhoods in particular - a denial of credit to otherwise credit worthy residents of the areas concerned is, to say the least, unhelpful.
Serious consideration ought to be given to amending the Equal Credit Opportunity Act so that geographic location does not remain a basis for discrimination. Credit worthiness should be determined uniformly and on the individual merits, not by the arbitrary application of tests having only to do with where the credit-seeker happens to live.