Long before our current three-digit credit score system, a consumer loan largely depended on an in-person application process. This made discrimination easy because lending officers could easily deny Black borrowers.
In 1974, the Equal Credit Opportunity Act intended to bar credit score systems from using information such as religion, race, sex, or marital status. This SHOULD have ended credit discrimination, but while the act worked hard, white supremacy works harder!
Most Black people pay rent, but rental payments are not considered in most older credit scoring models. Other common payments not being included, like utility or cellphone payments, ultimately hurt Black people.
This isn’t the only problem.
Many of us have little to no access at all to credit or even a trace of credit history because of a lack of banking systems in our community. Further, with sparse internet access, many of us never even have the chance to build credit.
Black borrowers suffer the most in our country’s current credit reporting system. That’s why we need to continue seeking new ways to work together to make our money work for us. Together we can finance our own systems!