- Decades of discrimination by the federal government and America’s financial institutions has induced an almost trauma-like response in many people of color, particularly African Americans, making them less likely to seek credit.
- This defensive behavior often distances people of color from the very credit-granting institutions they need to thrive.
- The ramifications can prove devastating, as good credit impacts everything from mortgage rates to hiring decisions by employers.
For many minorities in America, it’s an all too familiar scene.
An applicant who is a person of color and and applies for credit is either denied or gets much worse terms than a white borrower.
In fact, an investigation by the National Fair Housing Alliance, a Washington D.C.-based nonprofit, found that 60% of the time, applicants who were people of color — and way more financially qualified than their white counterparts —nevertheless were offered higher-priced car loans, costing them an extra $2,662 each over the course of the loan.
Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) joined forces in May to introduce the Loan Shark Prevention Act to “combat the predatory lending practices of America’s big banks and protect consumers already burdened with exorbitant credit-card interest rates.”
The legislation would cap interest rates at 15%, likely benefiting many consumers of color.