A recent MReport emphasizes the relationship between lack of credit history and homeownership. It is established that there is a connection between having strong credit and access to offers of credit and high homeownership rates. Zillow revealed in a recent study that roughly one in ten Americans are “credit invisible”, which means they lack a credit history. The amount of credit invisible Americans are disproportionately higher among Black and Latinx communities. Zillow also includes that having poor or nonexistent credit history is the most common reason Black applicants are denied when applying for a mortgage. Nicole Bachaud, an economic data analyst at Zillow, stated, “Lower homeownership is just one of many negative results borne out of poor credit health in communities nationwide. For many, walking into a bank or going online to apply for a loan or open a new credit card is simple. But for those excluded from the formal credit market in this country, it is a far more daunting task, and Black and Latinx households are especially vulnerable. A shift in credit reporting might be a first step to reducing the systemic barriers into homeownership and the financial market overall”.    


A report from the Urban Institute highlights that credit data to approve or deny potential borrowers can’t understand the experiences of about one in ten Americans who lack credit history. The report also includes, “although credit health appears to have improved for all groups during the pandemic, racial gaps have not narrowed”. The Biden administration is pushing for changes in the current credit system to alleviate this problem. The administration proposes that rental payment records and utility bills can be alternative ways to establish credit. Zillow concludes that this reconstruction of the credit system would bring many credit invisible individuals into the system. The report also notes that not only are Black and Latinx individuals more likely to be credit invisible, but they are also more likely to be residents in areas with higher credit insecurity. The report stated, “Specifically, some one in 10 Black households (9.7%) and 7.9% of Latinx households reportedly live in counties considered credit insecure, compared to 2.7% of White households and 3.5% of Asian households”. 

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