Op-Ed

‘Credit Invisible’ Blacks and Latinos

Published

10 years ago

May 18, 2015

By Charlene Crowell
NNPA Columnist

When it comes to consumer finance, traditional lenders usually review credit scores before reaching a decision. In general, the higher a consumer’s credit score is, the lower the cost of credit they will pay. Conversely, the lower one’s credit score, the higher the cost of credit and interest will likely be. Whether applying for a credit card, auto loan or a mortgage, bad credit histories make future credit and borrowing more expensive.

But according to a new report by the Consumer Financial Protection Bureau (CFPB), there are literally 45 million consumers – most of whom are either Black or Latino – who do not fall into traditional credit profiles. Beyond race and ethnicity, the affected consumers often live in low-income neighborhoods.

“When consumers do not have a credit report, or have too little information to have a credit score, the impact on their lives can be profound,” said CFPB Director Richard Cordray. “It can preclude them from accessing credit and taking advantage of certain opportunities.”

Cordray explained, “And given that we found that consumers in low-income neighborhoods are more likely to be credit invisible or unscored, this may be limiting opportunities for some of the most economically vulnerable consumers.”

CFPB found that one in 10 consumers – some 26 million people – are “credit invisible,” meaning they have no credit history with any of the three major nationwide credit-reporting companies. The Bureau’s analysis suggests that the differences across racial and ethnic groups occur in early adult lives and persist thereafter.

An additional 19 million consumers are “unscored,” with credit profiles either out-of-date or insufficient to be consistent with today’s commercially-available credit scoring model.

In comparing the credit experiences of consumers by race and ethnicity, CFPB found that 13 percent of Black consumers and 12 percent of Latino consumers are “unscored,” compared to only 7 percent of White consumers.

For the credit invisible, the incidences are higher. About 15 percent of Black and Latino consumers are in this credit group, compared to only 9 percent of Whites.

In other words, a significant number of consumers of color are living outside of the financial mainstream. Instead of having bank accounts or credit cards, these consumers are likely to use money orders, check cashing services, pre-paid debit cards and other costly alternative financial services that facilitate personal financial transactions while denying them the ability to build solid credit profiles.

While each credit reporting agency has its own criteria, typically consumers with comparatively high credit scores are able to secure the lowest lending rates and fees on financial services. According to FICO, recent credit activity connotes at least one account with activity over the last six months or longer. FICO scores can be as low as 300 or as high as 850.

For consumer advocates, access to credit continues to be a concern, especially when consumers of color are involved.

“The CFPB research suggests that alternative or enhanced credit reporting tools could ensure African-Americans and Latinos have more complete credit histories. The current system does not provide a complete picture of consumers in these growing communities – often forcing them to pay higher fees for financial services,” said Nikitra Bailey, executive vice-president with the Center for Responsible Lending. “This, in turn, leaves families and whole communities locked out of mainstream lending and ripe for abuse by predatory lenders.

“Just because a person or family lives in poverty, does not mean their only option should be a predatory lender. Access to credit can and should open doors of opportunity to a range of financial services that are fair, accessible, affordable and transparent for everyone.”

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.

###

Oakland Post

Posts by Oakland Post

Up Next

Child Watch: Taking Care of Needs of Students Without Insurance

Don't Miss

The Black Athlete: Tom Brady Deserves to be Punished

Oakland Post

Click to comment

Activism

Oakland Post Endorses Barbara Lee

Barbara Lee will be able to unify the city around Oakland’s critical budget and financial issues, since she will walk into the mayor’s office with the support of a super majority of seven city council members — enabling her to achieve much-needed consensus on moving Oakland into a successful future.

Published

4 weeks ago

April 2, 2025

Oakland Post

Congresswoman Barbara Lee. Courtesy photo, Office of Rep. Barbara Lee.

Former Congresswoman Barbara Lee. Courtesy photo.

As we end the celebration of Women’s History Month in Oakland, we endorse Barbara Lee, a woman of demonstrated historical significance. In our opinion, she has the best chance of uniting the city and achieving our needs for affordable housing, public safety, and fiscal accountability.

As a former small business owner, Barbara Lee understands how to apply tools needed to revitalize Oakland’s downtown, uptown, and neighborhood businesses.

It is notable that many of those who fought politically on both sides of the recent recall election battles have now laid down their weapons and become brothers and sisters in support of Barbara Lee. The Oakland Post is pleased to join them.

Oakland Post

Posts by Oakland Post

Activism

Actor, Philanthropist Blair Underwood Visits Bay Area, Kicks Off Literacy Program in ‘New Oakland’ Initiative

These community activations were coordinated with the San Francisco-based non-profit program “Room to Read.” Ray said he is also donating his time to read and take pictures with students to encourage their engagement and to inspire them to read more. The inspirational book “Clifford Ray Saves the Day” highlights Clifford Ray’s true story of saving a dolphin.

Published

2 months ago

February 18, 2025

Oakland Post

Blair Underwood (left) and Barbara Lee (right). Courtesy photo.

By Paul Cobb
New Oakland Series
Opinion Part 3

The Post mentioned three weeks ago that a number of our local luminaries were coming together to support the “New Oakland” movement. As this current national administration continues to eliminate our “legacy” institutional policies and programs left and right, most communities find themselves beyond “frozen” in fear.

Well, esteemed actor, long-time Bay Area supporter, and philanthropist Blair Underwood returned to Oakland this week to speak with city leaders, community trust agents, students, the Oakland Post, and local celebrities alike to continue his “New Oakland” initiative.

This week, he kicked off his “Guess Who’s Coming to Read” literacy program in some of Oakland’s middle schools. Clifford Ray, who played the center position of the 1975 World Champion Golden State Warriors, donated close to 1,000 books. Ray’s fellow teammate Charles “The Hopper” Dudley also gave Converse sneakers to students.

Underwood also spent quality time with the Oakland Ballers ownership group and visited the amazing Raimondi Park West Oakland community revitalization site. In the 1996 TV film Soul of the Game, Underwood played the role of the legendary first Black Major League Baseball player Jackie Robinson and commended the Ballers owners.

“This group of sports enthusiasts/ philanthropists needs to be applauded for their human capital investment and their financial capital investment,” Underwood said. “Truly putting their money and passion to work,” Underwood said.

Underwood was also inspired by mayoral candidate Barbara Lee’s open-minded invitation to bring public-private partnership opportunities to Oakland.

Underwood said he wants to “reinforce the importance of ‘collaborative activism’ among those most marginalized by non-empathic leadership. We must ‘act out’ our discomfort with passionate intentions to create healthy change.”

Oakland Post

Posts by Oakland Post

Activism

Councilmembers Ramachandran, Kaplan, Unger Identify Funds to Save Oakland Fire Stations

Our budget crisis – one of the worst in Oakland’s history – is compounded by the fact that people do not feel safe coming to Oakland due to our public safety crisis. By investing in our fundamental public safety resources today, we can send a signal to the world that Oakland is open for business. We have such a rich and vibrant culture, arts, and food scene that is worth celebrating – but we can only showcase this if we are able to keep our neighborhoods safe. Having fully functioning fire stations are absolutely essential to these efforts.

Published

2 months ago

February 18, 2025

Oakland Post

Councilmember Janani Ramachandran. Courtesy photo.

By Janani Ramachandran

There is no greater concern to the people of Oakland today than public safety. Fire stations are the bread and butter of essential city services – and every day that we have stations shuttered, we imperil the lives of our community members. In response to widespread outcry over the current and planned closure of stations, myself, along with Councilmembers Kaplan and Unger, have painstakingly worked to identify millions of dollars of new funding to save our stations. The legislation we introduced on Thursday, February 13th, will amend our budget to prevent the closure of four fire stations that are currently on the chopping block due to our budget crisis and will re-open two closed stations that have already been closed – Station 25 and 28 – in the near future. The resolution that will provide the funding to keep our stations open will go before the full City Council for a vote at our meeting on Tuesday, March 4^th at 3:30 PM – and we invite you to join us at City Hall to share your perspective on the topic.

With the devastating Los Angeles fire at the top of people’s minds, terrible memories of Oakland’s own wildfires are re-surfacing from the 1991 Oakland Hills Firestorm to the Keller fire just a few months ago – and how essential fire stations are to mitigating these catastrophes. But in Oakland, our fire stations don’t just fight wildfires – they also provide emergency medical services to our most vulnerable constituents, put out structural fires and encampment fires, and much more.

We recognize that there are a number of competing interests and important initiatives fighting for sparse City resources. But from my perspective, core safety services are the most pivotal functions that a City must spend its resources on – especially given the outcry we have heard around fire stations.

The fight to save our stations is not over. The resolution we introduced is a critical first step, and there are hurdles to overcome. If you support keeping our fire stations open, we invite you to be a part of the solution by making your voice heard at the March 4^th City Council meeting at 3:30 pm.