Black Borrowers Face Discrimination In Lending
1 year ago
Study says it's harder for black people to borrow money
Have you heard of Prosper.com? Well, it's a peer-to-peer site where people lend money to each other, but, you have to include a photo. And guess what? Black faces are 25 to 35 percent less likely to receive funding than a white borrower with similar credit.
The trend was discovered in a report, "What's in a Picture? Evidence of Discrimination From Prosper.com" where 110,000 loan applications from the popular lending website created between June 2006 and May 2007 were studied.
According to the Huffington Post:
Part of the reason for the stark discrepancy...is that the online lending market is less regulated than its brick and mortar counterpart, where discriminatory practices are more easily identified.
But that doesn't preclude racial discrimination from real-world borrowing entirely. In fact, a closer probe of mortgage lending practices during the housing run-up revealed that African-American and Latino borrowers were more frequently offered high-interest, sub-prime mortgages than their white counterparts, even when they qualified for better terms.
The study also revealed that people who were older and overweight were also discriminated against. People who had photos of themselves looking unhappy were also said to be highly unlikely to close a deal.
While this information is startling, should we be shocked? Black people don't like to lend other black people money, why are we surprised that others don't want to either?