Credit Scores: Black Americans Face Lasting Financial Damage
Subprime lending erases a generation of economic progress, trend suggests
It’s known that America’s foreclosure crisis has taken a disproportionate toll on black and Hispanic families, but a new study suggests financial disadvantages for African Americans could last for decades.
Previous studies have shown a “persistent gap between the credit scores of white and black Americans,” the Washington Post reports.
Acknowledging that it’s not a particularly new phenomenon, consumer advocates worry that gap has only widened in the current crisis.
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From the WaPo report:
Data collected by the Federal Reserve from 2003 — in the most comprehensive study on race and credit scoring to date — showed that less than a quarter of blacks had prime credit scores. Meanwhile, about 65 percent of whites were in this top tier.
The gap got wider as black and white Americans grew older, the Fed found. By age 75, the average black consumer’s credit score still had not reached the national average.
The playing field, advocates say, has never been level for African Americans. The companies that calculate credit scores say they don’t consider the race of the borrower in its formulas, the Post reports.
To read more about the lasting damage, click here.