| Unfair credit discrimination
still permeates the American marketplace. Every day, countless individuals
and families are denied access to mainstream credit because they are not
white or because they are women, or seniors, or disabled.
Despite a reduction in the most blatant and overt forms of discrimination,
there is ample evidence that creditors commit more subtle, but equally
pernicious discrimination against minority groups throughout the lending
process. Discrimination occurs in: 1) advertising and outreach (placing
far fewer branch offices in minority neighborhoods and conducting little
direct mail solicitation); 2) handling of pre-application inquiries (providing
more information and encouragement to whites than to others); 3) the loan
approval or disapproval decision (holding income constant, black and Hispanic
applicants are still far more likely than whites to be denied a mortgage
loan);2 4) loan pricing (charging
minority customers higher costs than other groups of borrowers)3;
and 5) loan administration (treating whites who have missed one or more
payments more leniently than non-whites). Although we have traveled far
from the days of explicit market segregation, there is still a long way
to go to achieve truly fair and open credit markets.
Besides perpetuating historical discrimination against minority groups,
credit discrimination destroys the financial well-being of its low-income
victims. Without access to reasonably priced credit, it becomes measurably
more difficult to achieve home ownership and build assets, finance a college
education or vocational training, or even purchase a reliable car for
transportation to work. Forced outside the mainstream market, many people,
if they are of the "wrong" color, gender, or national origin, often have
no choice but to purchase expensive and exploitative credit products and
serves in the "fringe" marketplace. |
Credit Discrimination |
and NCLC