Bringing Low-Income Communities Out of the Financial Shadows

With so many economic indicators heading in the right direction, many across the country feel that we’re on the cusp of coming out of this pandemic-caused downturn. However, a lower-than-expected May jobs report quickly reminded us that not everyone shares this optimistic feeling about the future.

The pandemic has disproportionately impacted marginalized and low-income communities. Our unemployment rate sits at 5.8 percent, and many of those still struggling to find jobs are from low-income communities that have been systemically excluded from the financial mainstream. Worse yet, according to the Pew Research Center, nearly 60 percent of non-retired, lower-income adults say that the pandemic will make it harder for them to achieve long-term financial goals.

Every person deserves the opportunity to reach their fullest financial potential. Unfortunately, some communities aren’t afforded that opportunity because they simply lack access to the same resources as other consumer groups. There are more than 100 million people who have limited credit histories or are subprime consumers, and over 40 million credit-invisible consumers who lack access to fair and affordable credit.

Far too many consumers, many of them from historically marginalized communities, are living in the financial shadows. Living on the margins of society means you encounter closed doors. Without access to fair and affordable credit, it’s nearly impossible to get approved for an apartment, a credit card or a car loan. Instead, you become the target of high-cost predatory lenders who dig you deeper into a financial hole of debt.

We have a responsibility to level the playing field and drive more equitable access to financial resources. We can’t move the needle if we just accept the status quo. Some have suggested overhauling the credit system to open more access, but it doesn’t need to be that complex. We just need to acknowledge the existing strengths in low-income communities and give credit for what is already good in their financial lives.

We need to embrace data that provides an opportunity for more people to build credit profiles and that paints a full picture of people’s financial lives. Marginalized and low-income consumers already have responsible money habits. They’re paying for rent, utilities, smartphones and streaming services — all in a timely manner. We just need to open the door for them, and they’ll walk through.

For example, there are financial programs, such as Mission Asset Fund’s Lending Circles, based on the concept of friends and family lending and borrowing money from each other. They allow participants to take out a loan, repay that loan and build credit. The results are striking: 90 percent of the participants without a credit score in one particular program were able to establish one and the average credit score grew 168 points. These programs build on a common practice, turning a community strength into a credit-building activity.

As consumers establish a baseline credit profile, the added data will help them build their financial reputations and better position them to achieve their financial goals. For some, that could mean homeownership — a step toward building generational wealth.

Equitable access to credit is the priority, but we don’t need to turn the credit reporting system on its head to achieve it. The end goal is attainable; we have the tools and resources. We all just need to be more willing participants for collaboration. Innovation and data will be our strongest assets. We’ve seen real progress among private companies and nongovernmental organizations — we need to embrace those initiatives.

We’re one country. In order for us to fully recover from the pandemic and truly move forward, we need to lift all of us up. That means leaning into expanded data sources, innovation and collaboration rather than starting from scratch — that’s how we’ll drive more equitable access to financial resources and opportunity for everyone.

As active participants in the credit economy and financial services industry, when we embrace that mindset, that’s when we effectively drive change and push our economy to its strongest potential.


As chief executive officer of Experian North America, Craig Boundy is responsible for all Experian North America business lines, including Credit Services, Decision Analytics, Consumer Services, Vertical Markets and Marketing Services.

José Quiñonez is founder and CEO of Mission Asset Fund, an award-winning nonprofit with models for integrating financially excluded, low-income communities.

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