Credit scores are not fair, and excessively lower scores among Black people reflect a discriminatory two-tier banking system.
For years, mainstream banks avoided Black neighborhoods, excluding them from loans and checking accounts. This created a market for “fringe” banking systems...
The “fringe” banking system - think payday loans, check cashing spots, and car title loans - is a multi-BILLION dollar industry that specifically targets Black communities.
They offer risky financial products and “high-cost, predatory loans” that result in higher delinquency and default rates, meaning Black people are more likely to have poor credit.
Fringe financial institutions swept through communities of color as early as the 1990s, which led to an influx of predatory home loans in Black communities.
Predatory home loans are risky, expensive, and destabilizing, and Black communities suffered from sky-rocketing high unemployment and foreclosure rates.
Subprime loans and payday lenders continue to exploit low-income people, regardless of the law. We need to question why we even need credit scores. They don’t indicate how trustworthy a person is. The only support an unfair banking system that exploits poverty and racism - while our community continues to suffer the economic consequences.