Finance

THE WORLD championships of slot-car racing are a microcosm of mayhem. Tiny remote-controlled models of cars fly up, down and off a convoluted circuit faster than befuddled spectators can follow. Forecasting winners is impossible. This year’s race, due to be held in America, was cancelled owing to travel restrictions. But amateurs of high-risk betting might instead find consolation in the equally bewildering, rapidly changing world of commodities.Until recently these seemed comfortably installed in the fast lane; the Dow Jones Commodity Index rose by about 70% in the year to June. But the rally has since run out of puff. Some materials, such as lithium, continue to climb. Other once-hot commodities have gone into reverse. The price of iron ore is down by 45% since its peak in mid-July; lumber, by 63% since early May.Things used to be much simpler. During the 2000s China’s rise fuelled a commodity “supercycle”—a prolonged period of high prices. When Chinese growth ebbed in the mid-2010s the sustained boom ended. This time, however, no single motor is propelling commodities upward. Both supply and demand are being hit by a series of short-term shocks that are interacting in unpredictable ways, creating a sense of chaos.Three categories of shock matter. The first is the stop-start, uneven nature of the economic rebound. China seemed on a tear early this year but has since faltered. America is going at full throttle, with Europe in its trail, but the Delta variant and supply bottlenecks may slow it down. Many poor countries have yet to pick up pace. All this creates sudden surges in demand for raw materials at a time when both producers and the shipping infrastructure, still disrupted by local bouts of covid-19, are already under strain. The price of copper was pushed up as demand recovered, but also because of mine closures in South America early in the pandemic. Freight futures, which investors, curiously, class as a commodity, have surged.At the same time, governments are intent on speeding up the green transition. This creates demand for the wood and the metals used to construct wind and solar farms, and boosts natural gas, a popular bridge between the dirtiest fuels and clean ones. Lithium, used in electric-vehicle batteries, rose by 21% in September alone. The same underlying cause—climate change—is causing disruptive weather events. Snow in Brazil, for instance, has helped push coffee prices up by 22% since early July. In August Hurricane Ida shut down most of the offshore oil and gas output in the Gulf of Mexico.Geopolitical tensions, the third driver, muddy the outlook further. Australia, a mining and farming giant, has entered a new alliance with America that is intended to contain China, its main customer, after the government in Beijing imposed embargoes on its prized exports. Russia is accused of limiting natural-gas sales to Europe to justify a controversial pipeline linking it to the continent. The European gas spot price has shot up by more than 80% since mid-August.Combine these factors and you get an insight into the commodity chaos. Iron ore has cratered because China no longer wants so much steel. But coking coal, the other ingredient in steelmaking, is glowing hot because Mongolia, a big producer, is in lockdown.Oil crossed $80 a barrel for the first time in three years on September 28th. Prices are high because OPEC and its allies are being unusually disciplined in limiting output, and shale wells in America, often quick to turn on the taps, are instead paying down debt. That would typically boost corn, the main component of American biofuel. But President Joe Biden is mulling a cut to the amount of biofuels refiners must blend into the total fuel pool, dampening demand. The price of palladium, used to make catalytic converters, has slumped by 25% in the past month because a shortage of microchips has halted car production.Jean-François Lambert, a former head of commodity-trade finance at HSBC, a bank, reckons the mayhem could well last until 2025, when the pressures on the market will start to ease. That might be why few investors seem keen to bet on the direction of prices. Although commodity markets have attracted strong inflows since the start of the year, analysts at Capital Economics, a consultancy, reckon that is mostly down to the popularity of exchange-traded funds tracking gold. Considering the chaos in the world’s commodity markets, it’s no surprise that investors want a haven.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Supermayhem” More

HOUSE PRICES in the rich world are growing at their fastest rate for 30 years. Those in America rose by a record 19.7% in the year to July, according to figures published on September 28th. House prices measured relative to incomes are above their long run averages in three-quarters of OECD countries. Policymakers nearly everywhere are under increasing pressure to make housing more affordable.Higher interest rates would bring down house prices relative to incomes, by making mortgages more expensive to service and tempering housing demand. But raising interest rates to cool the property market now runs the risk of jeopardising the economic recovery from lockdowns. More promising, in some people’s eyes, could be to tighten the “macroprudential” tools available to central banks and financial regulators, which seek to limit risky mortgage lending.On September 23rd the Reserve Bank of New Zealand tightened macroprudential housing policy for the third time this year, saying that past tightening had not done enough to tackle unsustainable house prices. Regulators in several other countries, including France, have also become stricter this year. Although these tools were designed to make lenders and borrowers more resilient by restraining the growth of debt, the case for using them to control house prices directly is weak.Macroprudential policies have a long history and encompass a wide range of levers, such as capital and reserve requirements and direct controls over lending rates and quantities. Policies aimed at the housing market can include restricting the amount of lending that banks can do at high loan-to-value (LTV) or loan-to-income ratios. LTV tools are the most common: in Europe more than 20 countries deploy them, and their use has increased significantly since the global financial crisis of 2007-09.These controls, by having limited credit growth, may well have been one reason why last year’s covid-induced recession did not trigger a financial crisis. Because household-borrowing growth and house-price growth often feed off one another, it could be tempting to tighten lending controls in order to improve affordability. But there are three reasons why that policy would be a mistake.The first is that research suggests that the effects on house prices do not seem to be large enough to make much difference to affordability. One intriguing example is a recent paper by Steven Laufer of the Brookdale Institute and Nitzan Tzur-Ilan, then of Northwestern University, which studies an LTV policy introduced in Israel in 2010. Faced with rampant house-price inflation, the central bank told lenders to hold additional capital against loans with LTV ratios of more than 60%, but only for lending of more than 800,000 shekels (around $220,000). This allowed the authors to compare the price growth of the houses subject to the measure with that in the rest of the market. The measures were found to reduce aggregate Israeli house prices by no more than 0.6%.Moreover, lending controls typically make mortgages more expensive for affected borrowers by rationing credit. So even if prices end up slightly lower, houses may not be more affordable. A study of European countries, for instance, shows that average mortgage rates rise when LTV policies are tightened.The third reason why macroprudential policies are not suited to improving affordability is that LTV controls may affect disadvantaged households disproportionately. The Israeli study found that the biggest negative effects on house prices were in the less desirable parts of more expensive cities, which they suspect occurs because credit-constrained households tend to buy in those areas. A previous paper by Ms Tzur-Ilan concluded that affected borrowers in the residential areas around Tel Aviv had to move on average 4-7km farther from their place of work following LTV-policy tightening, and faced up to an hour a day of extra commuting time. These side-effects may be justified if the ultimate goal is a more resilient financial system. But if the policies were intended to reduce house prices to help poorer households, they could prove counterproductive, entrenching existing inequalities.Over the past decade macroprudential policies, including housing tools, have played a big role in reducing borrowing growth in some countries, making the financial system safer. But the tools were never designed to improve housing affordability, and are ill-suited to that job. People frustrated by eye-watering rises in house prices might do better to press governments, rather than financial regulators, to solve the problem. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Home truths” More

WITH ITS fast trains, super-apps, digital payments and techno-surveillance, China can seem like a vision of the future. But for some scholars, such as Yuen Yuen Ang of the University of Michigan, it is also reminiscent of the past. Its buccaneering accumulation of wealth and elaborate choreography of corruption recall America’s Gilded Age at the end of the 19th century, an era that takes its name from a novel by Mark Twain and Charles Warner.China, including Hong Kong and Macau, now has 698 billionaires, according to Forbes, almost as many as America (724). The habits of the new rich could fill a novel in the spirit of Twain. Even the non-fiction accounts are outlandish. One billionaire, according to the book “Red Roulette” by Desmond Shum, offered the author’s well-connected wife a $1m ring as a gift. When she refused, he bought two anyway. One businessman remarked to Ms Ang that his neighbour’s dog will only drink Evian. Meanwhile, over 28% of China’s 286m migrant workers lack a toilet of their own. And in parts of rural China, 16-27% of pupils suffer from anaemia, according to a 2016 study, because they lack vitamins and iron.None of this makes Xi Jinping, China’s ruler, happy. According to a leaked account by a professor who grew up with him, he is “repulsed by the all-encompassing commercialisation of Chinese society, with its attendant nouveau riche”. Mr Xi has begun to talk more frequently about “common prosperity”. In January, he declared that “we cannot allow the gap between the rich and the poor to continue growing…We cannot permit the wealth gap to become an unbridgeable gulf.”Measuring China’s gaps and gulfs is tricky. The most common gauge of income inequality is the Gini coefficient, which has become popular despite being hard to interpret. One way to make sense of it is with a thought experiment. Suppose two people in a country are to meet at random. What will be the expected income gap between the two? If you know the income of everyone in the country, you can guess by calculating the average gap from every possible pairing. That expected gap can be expressed as a percentage of the society’s average income. Cut that percentage in half (to get to a number between 0 and 100) and you have the Gini coefficient. China’s official Gini is 46.5%, meaning that the expected gap will be 93% (ie, twice the Gini) of China’s average disposable income. Since average disposable income was 30,733 yuan ($4,449) in 2019, the expected gap would be about $4,138.China’s official Gini is higher than that of many advanced countries, including America and Britain. An alternative calculated by the World Bank looks better (38.5% in 2016), because it takes account of cheaper prices in rural areas. Another source, the World Inequality Database overseen by Thomas Piketty and his colleagues, reports higher figures, because they look at pre-tax income and because they take extra pains to ferret out the unreported income of the rich. But, as Martin Ravallion of Georgetown University points out, the poor may also have unreported resources, which may be large relative to their paltry reported incomes.Although the level of inequality differs between these measures, they all agree on one striking point. Inequality in China today is not as bad as it was about a decade ago. Indeed, some scholars have remarked on the “great Chinese inequality turnaround”.Why then has concern about inequality turned up, even as inequality itself has turned around? Twain may offer one answer. One of the protagonists of “The Gilded Age” comforts himself with the thought that although he and his wife have to “eat crusts in toil and poverty”, his children will “live like the princes of the Earth.” Similarly, many Chinese may tolerate life on the lower rungs of society, if they think they or their children can climb up the ladder.But that kind of social mobility seems to be slowing. Yi Fan and Junjian Yi of the National University of Singapore and Junsen Zhang of Zhejiang University have tried to calculate the persistence of income from one generation to the next. Chinese born in the 1970s inherited about 39% of any economic advantage enjoyed by their parents. Those born in the 1980s inherited over 44%. That is, if you knew one set of parents was 1% richer than an otherwise similar set of parents, you would expect their children to earn 0.44% more in their own careers than the other parents’ kids.Inequality may also be more conspicuous than it was. As Mr Ravallion and Shaohua Chen of Xiamen University have pointed out, the decline in Chinese inequality since 2008 does not reflect softer divisions within cities. It results instead from a narrower gap between urban and rural China. People tend to be more conscious of social fault-lines within a city than they are of disparities between one far-flung place and another.The guilted ageMr Ravallion suggests another reason why China’s great inequality turnaround has gone unnoticed: people do not think in Ginis or percentages but in yuan and fen, dollars and cents. The expected income gap between two random Chinese may have declined from 98% of average income at inequality’s peak in 2008 to 93% now. But because average income has risen in that time, the expected gap in yuan terms is still far larger. The income per person of the top fifth of households was 10.7 times that of the bottom fifth in 2014. That ratio has since fallen a bit. But the gap in yuan has increased from 46,221 yuan in 2014 to 69,021 yuan in 2019.The professor who grew up with Mr Xi speculated that if he became leader Mr Xi would “aggressively” tackle China’s gilded decadence, even “at the expense of the new monied class”. Mr Xi has already browbeaten some billionaires into public acts of philanthropy. The gestures will do little to shift the Gini coefficient. But they will make redistribution more conspicuous. Deng Xiaoping, one of Mr Xi’s predecessors, famously said that he did not care if cats were white or black as long as they caught mice. Mr Xi’s main opinion about cats is that he does not like them fat. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Black cat, white cat, fat cat, thin cat” More

Check out the companies making headlines before the bell:
CarMax (KMX) – The auto retailer missed estimates by 18 cents with quarterly earnings of $1.72 per share, although revenue topped analyst projections. Comparable pre-owned car sales rose 6.2%, less than the 7.3% estimate of analysts surveyed by StreetAccount. CarMax tumbled 7.1% in the premarket.

McCormick (MKC) – The spice maker reported adjusted quarterly earnings of 80 cents per share, beating estimates by 8 cents, with revenue slightly above Wall Street forecasts. However, it also cut its full-year earnings forecast as it deals with higher inflation and logistics challenges.
fuboTV (FUBO) – The sports-centered video streaming service’s Fubo Gaming unit is partnering with payments platform Paysafe (PSFE) for its interactive wagering operation. Paysafe rose 1.1% in the premarket while fuboTV added 1.4%.
Merck (MRK) – Merck struck a deal to buy drugmaker Acceleron Pharma (XLRN) for $180 per share in cash or $11.5 billion. It had been reported earlier this month that Acceleron was close to a sale agreement, and reports earlier this week had named Merck as the suitor.
Virgin Galactic (SPCE) – Virgin Galactic shares soared 8.9% in the premarket after the FAA concluded a probe of a July 11th flight mishap and allowed the company to resume launches. The investigation determined that the July flight had deviated from its assigned path and that Virgin had not communicated the deviation to the FAA as required.
Diageo (DEO) – Diageo said its new fiscal year is off to a strong start, with the world’s largest spirits producer pointing to a strong North American business and a faster-than-expected recovery in European markets. Diageo rose 2.3% in premarket trading.

AstraZeneca (AZN) – The drugmaker’s Covid-19 vaccine showed 74% efficacy in a U.S. clinical trial, and 83.5% efficacy in people 65 years and older. The company expects to file for U.S. approval later this year.
Altria (MO), Philip Morris International (PM) – The tobacco producers were ordered by the International Trade Commission to halt the import and sales of their IQOS heated tobacco device. The order stems from a patent case brought by rival tobacco producer R.J. Reynolds, with the case now moving to an administrative review.
Lordstown Motors (RIDE) – Lordstown is near a deal to sell its Ohio car factory to Taiwan’s Foxconn Technology for an undisclosed amount, according to people familiar with the matter who spoke to Bloomberg. The electric truck maker had bought the plant from General Motors (GM) less than two years ago. Lordstown rallied 5.6% in the premarket.
Herman Miller (MLHR) – Herman Miller fell a penny shy of Wall Street forecasts with adjusted quarterly earnings of 49 cents per share, but the office furniture maker’s sales came in well above estimates and it also gave an upbeat current-quarter earnings forecast. Herman Miller added 2.2% in premarket action.
Perrigo (PRGO) – Perrigo shares surged 14.3% in premarket trading after the drugmaker resolved a tax dispute with Ireland for about $399 million, with no interest or penalties applied.

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Economist Stephen Roach is warning that the U.S. may be on a collision course with 1970s-type inflation.
The former Morgan Stanley Asia chairman is worried that the impact of energy price spikes on China’s struggling supply chain will be the tipping point.

Crude oil topped $80 a barrel this week for the first time since 2018 before settling to the mid-$70s.
“We’ve had supply chain issues really now for the past year and a half. They’ve afflicted many commodities, inputs like semiconductors and now there’s energy and power related shortages in China,” Roach told CNBC’s “Trading Nation” on Wednesday.
He started sounding the alarm about China’s supply chain problems last year as the country was trying to cope with Covid-19 shutdowns.

‘One supply chain glitch away from stagflation’

“We were sort of one supply chain glitch away from stagflation,” said Roach, a Yale senior fellow and leading authority on Asia. “That seems to be playing out, unfortunately.”
Stagflation refers to pressures that push prices higher during periods of slowing growth.

“It’s worrisome for the overall economic outlook and raises serious questions about the wisdom of central bank policies — especially that of the Federal Reserve,” he said.
Roach is critical of the Fed’s historic easy money policies, questioning the need for excess stimulus amid sharp and likely long-term inflation.
“The likelihood of continued [supply chain] bottlenecks moving from one area to another, which is strikingly reminiscent of what we saw in the early 1970s, suggests that inflation will stay at these elevated levels for longer than we thought,” Roach said. “The Federal Reserve is already beginning to back pedal on its recent view that these pressures will fade quickly.”
If stagflation materializes, he contends, it could coincide with the holiday spending season.
“The impact will primarily be through the price level,” said Roach. “We need to look much more carefully about the potential risks.”
His latest prediction comes two months after he warned on “Trading Nation” that the U.S. and China were in the early stages of a cold war. According to Roach, the relationship is still contentious as China’s “common prosperity” push looks to level out wealth.
“The real risk is this potential sea change in policy strategy,” Roach said.
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U.S. stock index futures inched higher during overnight trading on Wednesday, after tech stocks dipped again as investors digest the impact from higher rates.
Futures contracts tied to the Dow Jones Industrial Average gained 81 points, or 0.24%. S&P 500 futures advanced 0.24%, while Nasdaq 100 futures gained 0.24%.

The Dow and S&P 500 inched higher during regular trading. The 30-stock Dow advanced about 90 points for its fifth positive session in the last six, while the S&P 500 gained 0.16%, breaking a 2-day losing streak.
The Nasdaq Composite, meanwhile, declined 0.24% for its fourth straight negative session. The technology sector declined again on Wednesday and is now down 4% for the week, making it the worst-performing S&P group.
The tech decline came as the 10-year Treasury yield hit a high of 1.56% on Wednesday, after rising to 1.567% on Tuesday. The move higher is pressuring tech stocks since it makes promised future cash flows look less attractive.
Investors are also monitoring the latest headlines out of Washington. On Wednesday the House passed a bill that would suspend the U.S. debt ceiling after Treasury Secretary Janet Yellen told House Speaker Nancy Pelosi on Tuesday that Congress had until Oct. 18 to raise or suspend the debt ceiling.

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However, Republicans in the Senate have said they will reject the legislation.

“While the political dynamics remain uneven, we think that US debt ceiling negotiations will succeed in time and a US government shutdown can be avoided,” UBS said Tuesday evening in a note to clients. “Overall, our base case still envisions solid economic growth and a gradual tightening of monetary conditions,” the firm added. Based on these projections, UBS advises investors to favor equities over bonds.
All of the major averages are firmly in the red for the week. The Dow is on track for its fourth negative week in the last five, while the S&P and Nasdaq Composite are on track for their worst weeks since February.
Wells Fargo noted that pullbacks are to be expected. “This is a normal re-pricing of risk based on a higher cost of capital and greater market uncertainty,” the firm said Wednesday in a note to clients.
On the data front, initial jobless claims for the prior week will be released. Economists are expecting a print of 335,000. The Bureau of Economic Analysis will also release its third estimate for Q2 GDP on Thursday.
When it comes to earnings, Bed Bath & Beyond will report quarterly results before the market opens.

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People walk by a Dollar Tree store on December 11, 2018 in the Brooklyn borough of New York City.
Spencer Platt | Getty Images News | Getty Images

Check out the companies making headlines in midday trading.
Dollar Tree — Dollar Tree surged 16% after the discount retailer announced plans to add price points above $1 across all Dollar Tree Plus stores and will begin testing price points above $1 in some legacy Dollar Tree stores. The company also increased its share repurchase authorization by $1.05 billion to a total of $2.5 billion.

Generac — The generator manufacturer saw its stock slide more than 4% after it issued new targets for 2024 at its Investor Day Wednesday morning. They include an adjusted earnings margin of 24%to 25% compared to FactSet estimates of 26.9%. It also repeated its full year 2021 guidance.
Lucid Motors — Shares of the electric car maker jumped more than 7% after the company said on Tuesday that it plans to deliver its first electric luxury sedans in late October. Lucid has kicked off production at its Arizona factory earlier this week.
Netflix — The streaming company rose 2.6% after announcing it bought videogame maker Night School Studio in an effort to diversify its revenue sources. KeyBanc also kept its overweight rating on the streaming giant and said Wednesday that the company’s content slate is resonating with subscribers.
Affirm — Shares of the financial services company lost over 1%. The decline comes despite Affirm’s announcement its investors day that it will offer a debit card and allow customers to execute cryptocurrency transactions directly from savings accounts.
Boeing — Boeing shares gained 3% after Bernstein upgraded the aircraft manufacturer stock to an outperform rating from market perform. Bernstein said Boeing is set to rally as vaccination rates grow around the world and global travel demand rebounds. The firm also hiked its price target on the stock to $279, nearly 30% higher than Tuesday’s close.

Eli Lilly — Shares of Eli Lilly rose nearly 4% after Citi upgraded the pharmaceutical stock to a buy from neutral. The firm said Eli Lilly’s share price is attractive currently after pulling back from its August highs. Citi anticipates the launch of Eli Lilly’s Alzheimer’s drug will be a key driver of growth for the company. The bank also hiked its price target on the stock to $265, implying nearly 20% upside from Tuesday’s close.
Gap — Shares of Gap rose less than 1% after the apparel retailer released the latest drop in its highly anticipated line with Kanye West’s Yeezy brand. The $90 hoodie became available for preorder online. Wells Fargo earlier this year estimated the Yeezy line could bring in nearly $1 billion in incremental sales in 2022.
AutoNation — AutoNation shares rose more than 5% after Morgan Stanley upgraded the stock to equal weight from underweight, saying the firm is bullish on the auto retailer’s management changes.
Conagra Brands — Shares of the packaged food company Conagra Brands rose more than 3% after Credit Suisse upgraded the stock to neutral from underperform on Wednesday. Other consumer food companies climbed: Tyson Foods gained 3%, Kraft Heinz and Kellogg added more than 2% and J. M. Smucker inched more than 1% higher.
Micron Technology — Shares of the semiconductor company slipped 2% after it issued guidance for the first quarter of 2022 that was weaker than expected. Other semiconductor stocks fell too. NXP Semiconductors and Microchip Technology lost more than 3% while Advanced Micro Devices lost 1.1%.
 — CNBC’s Hannah Miao, Maggie Fitzgerald and Yun Li contributed reporting

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Being able to review a credit report in Spanish will be a huge help for Rosalie Remarais in her job as the Community Development Mortgage Loan officer at Five Star Bank in Rochester, New York.
Remarais works with low- to moderate-income families, many of whom are first-time homebuyers, to help them purchase a house. One of the first things she does when working with potential homeowners is to go over their credit score and look at a credit report — something many have never done before.

For the clients she works with who speak Spanish, having the document in their native language will save her time having to translate the report for them, and will help customers fix any errors they find by themselves.
More from Invest in You:How to prevent fear and anxiety from ruining your financial lifeOp-ed: Why your financial problems make perfect sense to a psychologistEquifax will now offer credit reports in Spanish
“It would give them that power to say, ‘I’m in control,'” she said. “Because when it’s in English, the only one that has any control of that credit report is me.”
Spanish language credit reports available now
In September, Equifax began offering credit reports in Spanish.
“This is the first and only time that a bureau has been able to offer a fully Spanish translated report to consumers,” said Beverly Anderson, president of global consumer solutions at Equifax. She added that people can request Spanish reports online as well as by mail, and that the company also offers customer service support in Spanish.

The move was a long time coming for the Hispanic community in the U.S., as Spanish is the second most common language spoken after English. About 62 million people in the U.S. are of Hispanic origin, and more than 40 million speak Spanish as their first language.
“This is something we’ve been asking for for a very long time,” said Chi Chi Wu, staff attorney at the National Consumer Law Center, adding that some advocates have been working on this for decades. “It’s positive.”

Credit reports are an important financial tool
Building solid credit is important for many things from purchasing houses to cars.
“It’s a big step not only for the immigrant community but also for Americans who are bilingual, and English is their second language, but Spanish is their first,” said Marlene Cortes, manager of CASH-Roc Your Refund Project and Language Access at Empire Justice Center, a non-profit law firm focused on social and economic justice in New York state. It will also help children with parents who don’t speak English and thus must interpret and translate, she said.
Having access to your credit report — a compilation of the financial data your credit score is based on — means that you can better understand the score and fix any mistakes. That’s because if a consumer thinks there is an issue with their credit score — which could be lowered by incorrect information or identity theft — they cannot dispute it with FICO or VantageScore, another credit scoring model.

This is something we’ve been asking for for a very long time

Chi Chi Wu
staff attorney, National Consumer Law Center

Instead, they must debate any incorrect information with the credit reporting company — such as Equifax, Experian or TransUnion — and have them change the credit report.
Without the ability to read and understand the reports in Spanish, some consumers have no idea they have mistakes on the report or may have had their identity stolen.
Remarais has seen bilingual and limited English-speaking clients pay thousands of dollars to have their credit reports cleaned up, something that they could do themselves for free.
“With the credit report being in Spanish, it empowers people do to it themselves,” said Cortes.

The timing of the new Spanish language reports will be helpful to those who have been hit financially by the coronavirus pandemic, including many Spanish-speaking essential workers. Because of Covid, through April 2022 consumers can pull one free credit report per week instead of having access to only one free report each year.
Now is an especially good time for everyone to review their credit report, as errors on the documents increased during the pandemic.
In February and March of 2021, Consumer Reports asked 6,000 volunteers to pull their credit reports and 34% found at least one error. And, complaints about consumer credit reports with incorrect information surged nearly 120% from 2019 to 2020, according to data from the Consumer Financial Protection Bureau.
What’s next
To be sure, there are other companies that offer other services for Spanish speakers. FICO has offered a credit score in Spanish since 2012. Experian offers Spanish language resources and education, and TransUnion offers Spanish translations for credit reports over the phone.
Still, these offerings aren’t the same as what English speakers get, which is a problem, according to Wu.
“What you really want is the full shebang just as an English speaker would get it,” she said, adding that having access to paper and digital reports in one’s native language is important, as the credit companies often experience long hold times for phone calls.

The average FICO score is 711. Here’s what the number means and how you can get a higher rating

Other companies also serve the community, such as Crediverso, a Hispanic-owned personal finance firm founded in 2020 that offers free bilingual products, including a Spanish-language credit report, which was available before Equifax made its announcement.
“I think it all begins with identifying a need that has been kind of long overlooked by financial institutions,” said Carlos Hernandez, founder of Crediverso. “We realized that really across all financial products the Hispanic community was very much underserved relative to the general market.”
Advocates hope that the move by Equifax prompts the other major credit reporting companies, TransUnion and Experian, to introduce their own translated reports in Spanish available online, by mail and over the phone.
They also hope that companies consider offering reports in even more languages in the future, including Chinese, Tagalog, Vietnamese, Arabic and even American Sign Language.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns. More