‘Credit Where it’s Due: Rethinking Financial Citizenship’ is both the title of the new seminal book co-authored by eminent thought leader Professor Frederick Wherry and the subject of his VIP guest lecture delivered at the University of Birmingham on 21 March.

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Professor Wherry, notable theorist in financial sociology from Princeton University, USA, visited the Lloyds Banking group Centre for Responsible Business to talk about the link between credit and a sense of belonging to one’s community.

Hosted in the Harvard Lecture Theatre in the Alan Walters Building at the University, the space quickly filled with academics, students, leading practitioners and policy makers, all participating in conversations around credit, finance and sociology, the mix of backgrounds leading to lively debate across the room.

Through stories and hypotheticals, Professor Wherry illuminated the importance of having a (good) credit score in modern America. The lecture opened with a shocking statistic: 45 million Americans do not have credit scores. They are ‘invisible’, Professor Wherry commented, as credit checks are often utilised in order to obtain an apartment, to negotiate pay with employers and to choose a candidate for promotion at work.

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‘Imagine you’ve just moved into a new neighbourhood’, Professor Wherry challenged, looking across the sea of faces, ‘and your new neighbours knock on your door to welcome you. While at your house, they’re looking at your furniture, how you’ve assembled your house, and thinking ‘do they fit in to the community? Are they one of us?’ Credit scores can inspire many of the same emotions’.

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There are strong connections between credit scores and self-esteem, as well as a feeling of membership and inclusion. ‘Think about what having a credit card says about your class’, commented Professor Wherry. ‘Think about having educational debt, what does that say about you?’

There are whole communities of people in the USA who have either poor or no credit scores, who are excluded from certain jobs, neighbourhoods and financial assistance. These people are often ‘forced into neighbourhoods which are less safe for themselves and their families’, stated Professor Wherry, ‘they are often belittled in front of their children from debt collectors. Their self-worth is not acknowledged and they feel that others have no obligation to respect their self-worth’.

 ‘If you had a restaurant in town where people kept getting sick, they’d at least inspect the restaurant’, asserted Professor Wherry, his brow furrowed, ‘if a product is contaminated it would be removed. If a product is intentionally contaminated it would make the news. This is not the case for financial products aimed at poor people’. Many people do not enjoy a right to basic safety. ‘We need to move from ‘buyer beware’ to ‘seller behave’’, he stated firmly.

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Many communities of people, finding that they were unable to obtain responsible financial products/services due to poor or no credit scores, have turned to social lending, Professor Wherry commented. Communities have systems in place whereby they will each put an affordable amount into a communal pot, and loan the money to whomever is most in need. These loans are almost always repaid in full, but no credit is formally given.

This led to the establishment of the Mission Asset fund, a non-profit organisation which began recording data based on loans paid and repaid within communities, and adding this data to individual credit scores. ‘It was about going in and asking, what are people already doing which we’re not capturing? Not going in and saying, you need to change what you’re doing’, explained Professor Wherry.

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After the introduction of an electronic system to record the social loans, credit scores for those involved jumped by an average of 168 points, debt decreased by an average of $1,051 and Mission Asset fund saw a 90% success rate in establishing credit scored for those without.

To conclude the talk, Professor Wherry spoke about the four main components of financial citizenship: the right to respect; the right to safety; the right to belong and the right to co-create institutions. ‘It’s important for each and every one of us to be treated as though our decisions are valid, to be protected from deception and coercion, be able to use financial institutions to participate in one’s community and to have a say in products and services created for us’, finished Professor Wherry.

Professor Wherry attended the University of Birmingham as a VIP guest of the Lloyds Banking Group Centre for Responsible Business. He is planning international research projects with the Centre and its associates, aiming to address responsible business issues and achieve international impact in this field. Professor Wherry is a member of the Centre’s advisory board.