By Victoria Mejicanos
AFRO Staff Writer
The weight of a number
For residents of Baltimore, the barrier to buying a home, starting a small business or managing unexpected costs doesn’t rely on ambition alone. There’s a three digit number that plays a major part: the credit score. Research shows that a person’s credit score, though impacted by personal choices and financial decisions, is also dependent on race and place.
In Baltimore City, residents live in an area that has the lowest average credit score of the 100 most populous counties surveyed by Opportunity Insights, a Harvard University-based research team.
Data shows that across the nation, Black individuals fare worse than their White peers, even with perfect repayment history. According to data presented, the average credit score for Black individuals is nearly 100 points lower than White peers by the time they are 30. This gap persists throughout adulthood.
Systemic barriers
Denise Streeter, Ph.D, an associate professor of finance at Howard University, told the AFRO these disparities are systemic.
“We’re facing some unknowns,” she said. “We are facing some systemic issues that have impacted decisions probably since the beginning of slavery.”
Streeter said that “internal stereotypes” often negatively impact the credit profile of Black consumers.
According to research by the National Fair Housing Alliance, credit scoring systems have long had an impact on people and communities of color. This is due in part to the credit scoring system. A report, titled “Discriminatory Effects of Credit Scoring on Communities of Color,” found that “many credit scoring mechanisms include factors that do not just assess the risk characteristics of the borrower; they also reflect the riskiness of the environment in which a consumer is utilizing credit as well as the riskiness of the types of product a consumer uses.”
An updated 2024 report from National Consumer Law Center (NCLC), titled “Past Imperfect: How Credit Scores ‘Bake In’ and Perpetuate Past Discrimination,” speaks directly to the tie between race and poor credit score, stating that “credit scoring is a reflection of the racial economic divide and wealth gap in this country.”
Credit: Opportunity Insights
Researchers in the NCLC report highlighted the fact that, “…because of poor or non-existent credit histories, consumers of color are disproportionately denied jobs, credit, insurance, housing and other services, or are forced to pay more.”
Consumers then find themselves going round and round in a situation that is tough to exit.
As Black people try to handle all of their bills and necessities with lower income and higher costs, “the drain on income affects their ability to pay their current bills, let alone build assets to move ahead. They are less likely to obtain loans on affordable terms to buy homes or start small businesses, while also being more likely to be targeted by predatory lenders who will drain away even more of their income.”
In the end, NCLC researchers found that “the historic and current discrimination that is reflected in credit histories causes communities of color to fall even further behind.”
Streeter added that while structural change is needed, individuals have more power than systems do when it comes to making change.
“We can’t close the wealth gap universally, I want to be real about that, but we can close our personal wealth gap,” she said.
Educating the next generation
Research shows that there are tangible solutions, the most prominent being education. Dina El-Mahdy, Ph.D, an associate professor of accounting at Morgan State University said the earlier a child can learn the value of a dollar, the better.
“This topic actually should be taught at elementary school,” said El-Mahdy. “Kids should know that money is not free, and we should learn about investing and saving so this could be ingrained in our culture.”
Sherry Christian, the media and public relations manager at Baltimore City Public Schools, said in a statement to the AFRO that City Schools offers a variety of financial education programs. For K–8, schools participate in the BizTown program, which provides age-appropriate financial literacy experiences. In partnership with Junior Achievement of Central Maryland, students take mandatory lessons followed by hands-on experiences that focus on real-world situations like running a business and managing a bank account.
By high school, students can take a personal finance elective covering topics such as budgeting, saving, investing, credit, and long-term financial planning.
Investing in communities
Overall, long term investment in communities is the way to make sustainable change. As Opportunity Insights suggests, “investing in communities where opportunity has historically been limited, and focusing these investments to help youth and young adults from disadvantaged backgrounds avoid a cycle of restricted access to credit and engagement with high-cost alternative forms of credit.”
For El-Mahdy, everyone has a role—from parents and schools to non profits and banks— each can sustain the next generation to improve socio economic outcomes.
“We’re not only living to consume for today, just getting as much credit as we can and spending it,” said El-Mahdy. “We need to plan for tomorrow, and to plan for tomorrow, we need to plant seeds.”
Adult support systems
Adults in Baltimore also have support through the Financial Empowerment Center (FEC) at the Mayor’s Office of Employment Development, which sees about 600 customers a year according to Keyarah Watson the director of communications for the office. Roughly 75 percent of them come for credit or debt help, often because the two issues go hand-in-hand.
Every client reviews their credit report to decide on next steps such as creating a budget, building credit from scratch, or developing a debt pay-down plan. Since its inception, the FEC has served more than 1,300 clients, helping residents reduce just over $4 million in debt and 309 clients have increased their credit scores by at least 35 points.
The emotional side of credit
While city-backed programs focus on structured counseling and measurable results, some Baltimore residents turn to community leaders for a more personal approach. Rhonda Brunson, also known as “The Credit Queen” has spent more than 20 years teaching residents what she calls the “credit gospel.”
Brunson not only goes over credit reports, but the goals her clients have when it comes to credit. For her, credit is like a relationship, and it must have integrity.
“All banks are related. They are watching how you treat their ‘family members’ to determine how they do business with you,” said Brunson.
Credit: Nathana Reboucas / Unsplash
Not only is credit a relationship, but it tells a story. To Brunson, a credit file shows when there is a job loss or sudden illness or other financial struggles. She shared that aside from her consultations she often refers clients to therapy.
“People spend because it gives them a sense of control,” she said.
Brunson’s work now stretches beyond coaching. After battling breast cancer, and experiencing a drop in her perfect credit score, Brunson began drafting legislation that would give patients a temporary pause on credit reporting, evictions and utility shutoffs while in treatment.
Aside from Brunson, nonprofits like the CASH Campaign of Maryland offer free coaching and classes while also pushing for policies that expand access to safe credit.
The role of non-profits
Veronica Purcell Crosby, a program manager at the CASH Campaign of Maryland explained that one of the largest systemic barriers residents face is simply knowing where to start and which products are safe.
To address this common barrier CASH campaign participates in the Bank on Maryland Coalition which connects consumers with vetted banks and credit unions offering safe low-fee products.
Crosby also noted that some clients may arrive “credit invisible” which is when a client has no credit history due to their salary being cash only. In those cases counselors provide education and help clients explore safe pathways into the credit system.
“Credit is an asset,” said Crosby. “It’s how we buy homes, cars, and build wealth. Our job is to make sure every Marylander has the information and tools to do that safel
Closing the gap
Credit is more than an arbitrary number, it is a longstanding system that can have drastic impacts on a person’s life. As Streeter puts it, “We are the protectors of our own wealth, and to build wealth and to manage wealth, we have to be educated of the rules of the game so that we can play along.”
This article is part of a national initiative exploring how geography, policy, and local conditions influence access to opportunity. Find more stories at economicopportunitylab.com/ .