Medium: Reparations, Race, and Reputation in Credit: Rethinking the Relationship Between Credit Scores and Reports with Black Communities

Medium, August 7, 2020: Reparations, Race, and Reputation in Credit: Rethinking the Relationship Between Credit Scores and Reports with Black Communities

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.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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