Every day, Americans are approved or denied for jobs, loans, and apartment leases based on the information contained in their credit reports. While this is a problem that needs to be address in every community, it has had a particularly devastating effect on minority communities.
According to Sarah Ludwig of The Guardian, credit reports “embed existing racial inequities in our credit system and economy.” She explained that decades of institutional racism like redlining and predatory lending have contributed to lower credit scores among minorities and they have perpetuated inequality, segregation, and poverty.
For example, banks systematically refused to make more loans in Black and Hispanic neighborhoods for decades, and that practice left communities of color without the home loans and investment needed to strengthen credit histories.
Without those traditional loans, minority communities are forced to turn to predatory lenders and check cashing stores for basic loans and financial services.
Those high-interest loans are more likely to end up in default, and appear as a negative mark on someone's credit. Back in the 90s, banks took advantage of these minority communities by issuing predatory mortgage loans, which led to waves of foreclosures in the black and Latino communities, and the eventual financial crash of 2008.
All of these factors have essentially locked decades of racist policies into the credit history of minorities, and that history follows them in every job or loan application. Despite mountains of evidence showing that credit histories have no demonstrated connection with a person's character or job performance, many employers still perform a credit check on prospective employees.
Various cities around the country have began banning this practice in initial employment screening, but, far too many people are still impacted by the over use of credit checks.
No one should be denied work because they were a victim of decades of racial injustice. Using credit scores to deny people homes or work is simply wrong, and it's time to stand up to the credit bureaus who profit off of that practice.
-Thom
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