Does race impact credit scores?
Well, it is not supposed to.
Credit scores are supposed to be entirely based upon your history without any reference to your race, where you live, where you work, or any other essentially irrelevant data, such as your shoe size and the name of your cats.
But recently, credit reports have been used for a variety of additional things besides just credit, namely, employment applications and insurance.
And unfortunately, this creates an undue disadvantage for certain people.
Because it has been found that people who live in urban neighborhoods, that comprise many races, tend to have significantly lower credit scores than people who live in the suburbs with predominantly white middle class people.
The data collected showed that almost 45% of residents in black neighborhoods had an average credit score of less than 580. At the same time, nearly 56% of residents living in mostly white neighborhood had scores in excess of 740. The average score in the United States is 723. Only 17% of black Americans surpassed this level.
Many states are considering and some have already passed legislation that prohibits the use of credit data for prospective employees. Data like this is providing more pressure to lawmakers on both the state and Federal levels.
Reference: Data Reveals Impact of Race on Credit Scores
