#Equal credit opportunity full
“In full disclosure, I’m a Black woman, growing up in America, who was raised in a redlined neighborhood,” Pressley said during a congressional hearing last July. On this issue, she brings her lived experiences to bear.
Ayanna Pressley’s (D-MA) recent push to reform credit reporting practices doesn’t come from just the policy papers and data that show the stranglehold these practices put on Americans, particularly people of color. On top of the 15% of Black Americans who are credit invisible, an additional 13% have credit records that don’t show up in credit scores, compared to 7% of White Americans, according to data from the Consumer Financial Protection Bureau. While only 9% of white Americans fall in that category, 15% of Black Americans do.Ĭredit-invisible Americans primarily use cash, seeing that as safer than banking, and even promoting the idea among Black consumers that paying in cash is a virtue. Black Americans are far more likely to be credit invisible, with little or no credit histories. The system discourages some Black Americans from trying to access credit markets at all, for fear that they will be rejected or be subject to predatory terms. These often come with usurious interest rates and exorbitant fees that make borrowers more likely to default, further damaging their credit. Those factors chase some Black Americans out of traditional credit markets, steering them toward less stable forms of credit, such as check-cashing, payday loans, rent-to-own schemes, and secured credit cards. Hopp-Bruce/The Emancipator/Nadia Snopek/Adobe And credit reporting agencies don’t have to give a reason why. Black Americans are more likely to have negative payment histories weighed against them in credit scoring and far less likely to get the positive benefits from the kind of payments they are most likely to be making, such as rent and utilities.
With credit scoring, a system developed in the 1970s and implemented in the 1980s ostensibly as a neutral way of weighing credit worthiness, its impact on the racial wealth gap is crystal clear. That affects the economic position of those communities, and that is reflected in credit scores.” “Then you deprive their communities of assets. “You start with Black consumers who have been denied their human rights and economic rights during enslavement and redlining and Jim Crow with legalized discrimination,” Wu says. “Credit scores are the perfect example of how structural racism works,” says Chi Chi Wu, staff attorney at the National Consumer Law Center and author of the “Reparations, Race, and Reputation in Credit: Rethinking the Relationship Between Credit Scores and Reports with Black Communities.” The reasons for these disparities are complex, but they stem from discriminatory policies dating back before the nation’s founding that denied Black Americans access to wealth-building assets.
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