The racial disparities in credit scores are due in part to the racial wealth gap, which makes it more difficult for Black consumers to weather periods of financial distress and to recover from them. It’s a lot harder to keep paying the bills during a rough financial patch, such as the current COVID economic crisis, when Black families have one-tenth of the assets of white families ($17,150 in assets for Black families versus $171,000 for white families). As a result, the credit reports and credit scores of Black families suffer.
The racial wealth gap, in turn, is due to decades of systemic discrimination and centuries of enslavement. Housing discrimination, in particular, is responsible for much of the racial wealth gap. Redlining by the Federal Housing Administration, which explicitly mandated segregation by race, deprived Black communities of the ability to accumulate wealth through homeownership.