Historical perspective of minorities and credit

It is estimated that nearly 70% of the population in the United States own a home; however, minorities are far from owning a home because for them it is harder to apply for credit, mortgage, and loans. This situation is not only limited to home ownership but in almost any issue involving credit.

Small business owners belonging to minorities usually have a more difficult start up than other small businesses due to the lack of funding support, despite the Federal Reserve System act encouraging financial institutions to help meet the credit needs of those communities in which they operate.

The Community Reinvestment Act of 1977 (CRA) is intended for small business lending, but particularly focused in low and moderate-income communities. The Equal Credit Opportunity Act of 1974 prohibits discrimination in credit transactions based on race, color, religion, national origin, sex, or marital status.

This way, the National Credit Union Administration has been helping families buy their home and developing programs like the "American Dream Downspayment Initiative", which delivered $161 million to more than 400 state and local governments nationwide during 2004.

The FHA is an agency within the US Department of Housing and Urban Development (HUD) in charge of the administration of loan programs that issues loan guarantees; that proposed to Congress a legislation to allow the offer of a zero down payment mortgage, to help at least 150,000 families belonging to minorities become homeowners each year.

Other credit lenders focus their help on communities chosen because they are distinct and well-recognized ethnic neighborhoods with viable small business sectors, or in women, who are also catalogued as a minority group, comparable to other racial, ethnic, or religious groups without easy access to credit.

Historical studies on minorities reveal that Black owners start their businesses with significantly less capital than Hispanic owners do. From this perspective, when minorities are divided in sub-groups, some ethnic groups may have more trouble applying for credit than others, the same as women and disabled persons among other minority sub-groups.

Many lenders explain that diversity makes it hard to establish credit criteria, a nonsense position if we consider that score credits are based on a person's credit history and never affected by an applicant's color, race, sex, religion, where the applicant was born, or where he or she lives.

In the United States 26% of the population has no credit score. From them 30% are Hispanic and 20% are Asian, with no access to credit services despite they could be financially responsible, but face difficulties because their payment history is not recorded by the credit bureaus.

Ironically, financial services consider minorities as one of the better economic growing opportunities. One out of 10 Americans was born in another country, so undeserved minorities are beginning to be considered by many credit organizations. In fact, it is estimated that the number of all immigrant homeowners in the U.S. will increase to 6.8 million people by 2010 because of several minority groups that have better credit histories than whites do.

Minorities have and still are a part of the country's nature; however, the history of minorities and women in credit affairs is still being written because of cultural resource surveys. Historic districts held documentation showing the important role in finance of women and minority communities, including Hispanic, African, Asian, Islanders, Religious and Disability groups, as well as other minorities in the nation.

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