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On December 20th, the Cincinnati Business Courier ran an item by Randy Simes entitled “New report challenges negative views on gentrification” — and it was republished on December 23rd with UrbanCincy.com under the title “Gentrification occurring in more than Cincinnati’s center city neighborhoods.” These items reference research conducted by the Federal Reserve Bank of Cleveland, and that data extols the virtues of gentrification, suggesting that people end up with higher credit scores when a neighborhood is gentrified. The Business Courier’s headline especially bolsters such a reading.
Simes writes that “[o]ne of the biggest concerns shared by those worried about the gentrification of neighborhoods is that it is particularly those that rent, rather than own, who are affected most. This too, however, is challenged by Hartley’s research.”
Simes continues by citing from the Federal Reserve Bank’s research item, a piece by Daniel Hartley entitled “Gentrification and financial health”: “Mortgage-holding residents are associated with about the same increase in credit scores in gentrifying neighborhoods as non-mortgage-holding residents. … [T]his result suggests that renters in gentrifying neighborhoods benefit by about the same degree as homeowners.”
By claiming that common conceptions about gentrification are “challenged by Hartley’s research,” Simes appears to promote Hartley’s work as relevant to Cincinnati’s discussion on gentrification — and therefore as applicable to displaced working poor being pushed out of places like Over-the-Rhine in the name of “redevelopment.” Though Simes interviews Dr. David Varady, a University of Cincinnati professor and expert in housing (who does not agree with Hartley’s research), neither Simes nor Varady identify potential oversights with the overall research methodology — problems which showcase how the Federal Reserve’s data seems to mischaracterize the so-called benefits of being pushed out of a gentrified neighborhood.
For example, Hartley not only maintains that living in a gentrified area is good for credit scores, he says that moving out of a gentrified area is even better: “The data seem to show that there is a positive change in the financial health of the existing residents of gentrifying neighborhoods as measured by their Equifax Risk Score™ and delinquency rates. This positive change is present for mortgage holders, for nonmortgage holders, for those that stay in the neighborhood, as well as for those that move out.”
Is it possible that gentrification actually benefits an area’s original residents, despite the concerns of those who believe it can cause widespread displacement in the name of providing upscale housing for mostly white young professionals?
It turns out a credit score cannot be calculated for someone with no accounts. The Equifax website delineates what sorts of trade lines get computed in determining this information: “Trade lines are your credit accounts. Data furnishers report information on accounts you have established with them such as the type of account (bankcard, auto loan, mortgage, etc.), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.” Equifax customer service also confirmed how people without traditional accounts cannot have a credit score.
If someone does not have a credit card, nor a car loan, nor a mortgage, nor a bank account, then they cannot be included in the data provided by Hartley’s research for the Federal Reserve.
According to Cincinnati social worker Alice Skirtz — author of the book Econocide: Elimination of the Urban Poor — poor people in neighborhoods being gentrified turn to one another instead of traditional creditors. She provided examples of how this manifests: “‘Watching’ each other’s children while moms and dads go to work because they cannot afford the cost of child day care — often do-able only because some adults work night shifts others by day,” explained Skirtz. She continued: “Using US Post Office money orders (only $1.20 fee up to $500 complete with hard copy receipts) to pay bills because they cannot afford the bank fees nor have free checking accounts; doing chores like weekly setting out cans for waste collection ‘in trade’ with a merchant for personal care supplies like shampoo and toothpaste not available with Food Stamps; sharing rides to work in return for food or services like haircuts; and, the cruelest financial problem of gentrification, affordable, safe, decent housing disappears so a hugely disproportionate share of household income must go to rent and utilities.”
Skirtz’s observations align with other published literature on the matter.
According to Dr. Jeffrey Feinstein’s white paper for LexisNexis entitled “Alternative data and fair lending,” “A disproportionate percentage of low income and historically disadvantaged minority consumers use alternative credit products (like payday loans and prepaid cards) and lack these traditional banking relationships. As a result, these historically underserved consumers may lack traditional credit profiles, are unscorable by credit-data scores, and are often declined opportunities to open credit cards, auto loans, and mortgages.”
Liz Weston, a writer for Financial Times, notes a similar problem in an item entitled “Why your credit score matters”: “People who have low incomes or who live in some minority neighborhoods might have less access to mainstream lenders and thus have worse credit scores. The lenders these disadvantaged populations do use—finance companies, subprime lenders, and community groups—might not report to credit bureaus, making it harder to build a credit history.”
Simes included no such details in his item for The Business Courier nor for UrbanCincy.com. Despite publishing disagreements by a local university professor, his story still promotes the idea that gentrification can increase the credit scores for people in gentrified neighborhoods. And, though Over-the-Rhine was not included in the Federal Reserve Bank’s research, items like this promote the concept that gentrification is good for a community’s original population, even those who end up having to move (or who end up getting displaced). The reality, however, is that many disadvantaged populations have no access to traditional credit scores, and as such this study has nothing to say about such a population — the true victims of corporatized gentrification.
Simes writes that “[o]ne of the biggest concerns shared by those worried about the gentrification of neighborhoods is that it is particularly those that rent, rather than own, who are affected most. This too, however, is challenged by Hartley’s research.”
Simes continues by citing from the Federal Reserve Bank’s research item, a piece by Daniel Hartley entitled “Gentrification and financial health”: “Mortgage-holding residents are associated with about the same increase in credit scores in gentrifying neighborhoods as non-mortgage-holding residents. … [T]his result suggests that renters in gentrifying neighborhoods benefit by about the same degree as homeowners.”
By claiming that common conceptions about gentrification are “challenged by Hartley’s research,” Simes appears to promote Hartley’s work as relevant to Cincinnati’s discussion on gentrification — and therefore as applicable to displaced working poor being pushed out of places like Over-the-Rhine in the name of “redevelopment.” Though Simes interviews Dr. David Varady, a University of Cincinnati professor and expert in housing (who does not agree with Hartley’s research), neither Simes nor Varady identify potential oversights with the overall research methodology — problems which showcase how the Federal Reserve’s data seems to mischaracterize the so-called benefits of being pushed out of a gentrified neighborhood.
For example, Hartley not only maintains that living in a gentrified area is good for credit scores, he says that moving out of a gentrified area is even better: “The data seem to show that there is a positive change in the financial health of the existing residents of gentrifying neighborhoods as measured by their Equifax Risk Score™ and delinquency rates. This positive change is present for mortgage holders, for nonmortgage holders, for those that stay in the neighborhood, as well as for those that move out.”
Is it possible that gentrification actually benefits an area’s original residents, despite the concerns of those who believe it can cause widespread displacement in the name of providing upscale housing for mostly white young professionals?
It turns out a credit score cannot be calculated for someone with no accounts. The Equifax website delineates what sorts of trade lines get computed in determining this information: “Trade lines are your credit accounts. Data furnishers report information on accounts you have established with them such as the type of account (bankcard, auto loan, mortgage, etc.), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.” Equifax customer service also confirmed how people without traditional accounts cannot have a credit score.
If someone does not have a credit card, nor a car loan, nor a mortgage, nor a bank account, then they cannot be included in the data provided by Hartley’s research for the Federal Reserve.
According to Cincinnati social worker Alice Skirtz — author of the book Econocide: Elimination of the Urban Poor — poor people in neighborhoods being gentrified turn to one another instead of traditional creditors. She provided examples of how this manifests: “‘Watching’ each other’s children while moms and dads go to work because they cannot afford the cost of child day care — often do-able only because some adults work night shifts others by day,” explained Skirtz. She continued: “Using US Post Office money orders (only $1.20 fee up to $500 complete with hard copy receipts) to pay bills because they cannot afford the bank fees nor have free checking accounts; doing chores like weekly setting out cans for waste collection ‘in trade’ with a merchant for personal care supplies like shampoo and toothpaste not available with Food Stamps; sharing rides to work in return for food or services like haircuts; and, the cruelest financial problem of gentrification, affordable, safe, decent housing disappears so a hugely disproportionate share of household income must go to rent and utilities.”
Skirtz’s observations align with other published literature on the matter.
According to Dr. Jeffrey Feinstein’s white paper for LexisNexis entitled “Alternative data and fair lending,” “A disproportionate percentage of low income and historically disadvantaged minority consumers use alternative credit products (like payday loans and prepaid cards) and lack these traditional banking relationships. As a result, these historically underserved consumers may lack traditional credit profiles, are unscorable by credit-data scores, and are often declined opportunities to open credit cards, auto loans, and mortgages.”
Liz Weston, a writer for Financial Times, notes a similar problem in an item entitled “Why your credit score matters”: “People who have low incomes or who live in some minority neighborhoods might have less access to mainstream lenders and thus have worse credit scores. The lenders these disadvantaged populations do use—finance companies, subprime lenders, and community groups—might not report to credit bureaus, making it harder to build a credit history.”
Simes included no such details in his item for The Business Courier nor for UrbanCincy.com. Despite publishing disagreements by a local university professor, his story still promotes the idea that gentrification can increase the credit scores for people in gentrified neighborhoods. And, though Over-the-Rhine was not included in the Federal Reserve Bank’s research, items like this promote the concept that gentrification is good for a community’s original population, even those who end up having to move (or who end up getting displaced). The reality, however, is that many disadvantaged populations have no access to traditional credit scores, and as such this study has nothing to say about such a population — the true victims of corporatized gentrification.