Credit Discrimination effects millions

"We simply cannot as a nation tolerate unfair and illegal activity that puts some of our citizens at a disadvantage as they try to participate in the credit market."

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.