Have you attempted to obtain a loan for a home or business, but you were denied because of where you live? Has your credit score been affected by paying a phone bill a week late? Have you found out that manager or executive position was given to a candidate who was less qualified?
These topics and concerns were discussed among others during the workshop “The Color of Money: Bad Credit, Wealth & Race.” The event, held on January 18 at the Minneapolis Urban League, was a collaboration of the Minneapolis Urban League and the African American Financial Capability Initiative Community of Practice (AAFCI), which is composed of Hope United CDC, NorthPoint Health & Wellness Center, and Summit Academy OIC.
The program was moderated by Steve Belton, president of Minneapolis Urban League. Guest speakers were Dr. Mahmoud El-Kati and Dr. Samuel L. Myers, Jr.
Employers, landlords and insurance companies now use credit reports and scores to make decisions that have a major bearing on our social and economic opportunities. This workshop presented racial discrimination myths among lenders and cultural events in the Black community that affect the lending process.
For decades, banks have systematically redlined Black and Latino neighborhoods, refusing to make conventional loans or locate branches in lower-income areas. Kimberly Smith-Moore, vice president of Wells Fargo, a North Minneapolis resident born and raised there, manages a down payment assistant program for homeowners.
Smith-Moore reported that she became interested in real estate in order to help the Black community realize they could become homeowners. “Purchasing a home is about building wealth. Equity in a home is wealth,” Smith-Moore said. “We need to give our people the right information and proper tools and sources to grow.”
Dr. Samuel L. Myers, Jr., a professor of human relations and social justice at the University of Minnesota’s Humphrey School of Public Affairs, stated that the average credit score for African Americans is 599, just short of the fair FICO credit range, which is considered to be 630 to 689, according to analysis by Freddie Mac, who buys loans from Wells Fargo. “Thirty-nine percent of Whites have been turned down for loans as opposed to 59 percent of African Americans,” Myers reported.
“Wells Fargo will not tell you ‘I’m turning you down because you are Black,’ Dr. Meyers stated. “What they will say is, ‘I’m turning you down because the secondary market buyer will not buy.’”
He also made the case that a lot of African Americans believe their credit is worse than it actually is, or do not know the validity or benefits of credit. “African Americans are two to three times more likely to get turned down. If they don’t, they end up paying higher insurance and interest rates, even with a house paid off. The equity is already there. Why are we still being turned down?”
Myers also pointed out that a college graduate today faces different circumstances than when he grew up. “When I graduated from college, people used to go to a job, started it, and stayed at that job for years. Now you go through different jobs [after graduation]. Sometimes, however, the change in job is upward mobility and more income.”
As Myers stated the various requirements for loans and proper credit, he mentioned another thing creditors look for: “One of the questions is, how long have you been at your job. In some cases, if you haven’t been at a job no longer than two years, you can forget about it,” Myers said. “Up until 2005, a good majority of credit lenders did not even use credit scores.”
Other factors that predict requirements of a loan include but are not limited to college education, family background, where you live and how long you’ve lived there, equity, business ventures, even family wages.
Dr. Mahmoud El-Kati presented the historic racial entities that play a part in current day socio-economic factors regarding lending and credit. “The problem is White supremacy. The solution to the problem is to defeat that ideology.”
“Race is not real. It is a modern idea,” said El-Kati, “not a discovery, but an invention. America is not White. The world is not White.” He said race is really used as indicator of individual ability for cultural achievement. “You can look at me and tell that I’m dumb,” El-Kati stated sarcastically.
El-Kati pointed out that image-making plays a part in the construct as well. “Black children cannot imagine living in the time of George Washington; they cannot imagine the man with Washington was Black. When Thomas Jefferson woke up in the morning, most of the people he saw were Black. Blacks were a part of the first U.S. Census in 1790.
“We have Black people right now who resist being taught their own history. Not the history written in the book, but your family history, your cultural history. “I’m one of the people who embraces the past,” El-Kati said.
“There are different interpretations of our history. This is my interpretation of what history is. No one since 1619 has more invested in this country than Black Americans. Five thousand [Black Americans] fought in the Revolutionary War. I dare you to tell me go back to Africa.”
El-Kati encouraged patrons of the workshop to become more inclined toward community support and knowledge. “Support your local Black businesses. Read the Black press. If you don’t have history, you’re not a human being. History is just another word for humanity.”
Ivan B. Phifer welcomes reader responses to ivan.b.phifer@gmail.com.
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