Belleville News-Democrat
September 20, 2010
Averages for metro-east communities reflect economic disparities, report says.
From Belleville News-Democrat:
A new report shows a disparity in credit scores between metro-east communities that have predominantly white residents and towns with predominantly black residents.
In its report, called “Bridging the Gap,” the Woodstock Institute in Chicago concluded that these results indicate significant differences in economic opportunity for black residents in the metro-east as well as communities in the Chicago area.
Those with credit scores in the lowest range usually have a far more difficult time accessing low-cost mortgages, auto loans or credit cards than individuals with higher credit scores. Also, credit scores are becoming more commonly used by lenders, landlords, insurance and utility companies as well as employers who incorporate the scores into their decision-making processes.
Research from the nonprofit Woodstock Institute has found that six of the most recent and lowest credit score averages by ZIP codes in the metro-east were all in the East St. Louis area. Of the six ZIP codes, black residents comprised between 46 percent and 98 percent of the population. The average credit scores, which were recorded in these areas on June 30, 2009, ranged between 579 and 635.
In comparison, the five highest average credit scores were found in St. Jacob, Millstadt, Glen Carbon, Maryville and Highland, where average scores were between 716 to 728, and the black population was between 0 percent and 7 percent. The overall average credit score of all 38 metro-east ZIP codes was 682.
Woodstock Institute researcher Geoff Smith said the new data can be used to help inform and drive new policy and solutions to close these gaps.
Chris Giangreco is especially interested in where low credit scores are concentrated. He manages asset-building policy initiatives at Heartland Alliance for Human Needs & Human Rights in Chicago, which helps people living in poverty. He also coordinates with the Illinois Asset Building Group, which invests in building stability and strength in the state’s communities through increased asset ownership and protection.
Giangreco said lower credit scores being concentrated in more impoverished communities is a growing problem. He hopes the new data can help put new policies in motion.
“The problem of credit score and credit scoring, for a variety of different reasons, has become a bigger issue for us,” Giangreco said. “This gives us an opportunity to move toward policies to close that gap.”
