55-5 Born in the Red

Abstract

Existing academic literature has not directly addressed solutions for the race-credit disparity. Local, state, and federal agencies along with private organizations, have implemented various types of credit education programs. These programs have been largely unsuccessful. Federal legislation was passed to make loan terms more transparent and loans more accessible. While arguably helpful to sophisticated borrowers, data indicates that mandatory term disclosure does little to affect consumer behavior. More needs to be done in order to break the low credit score cycle. This Comment proposes an application of Affirmative Action principles to break the cycle and bring an entire underserved population into the modern banking and lending scheme, complete with reasonable interest rates, lower costs, and a decreased likelihood of default. Without significant and drastic changes, “the country is headed toward a kind of financial segregation.”