The lack of equal access to financial education severely hinders the ability to secure credit, especially for people from marginalised communities, according to new research.
The survey by financial wellness company Credit Sesame reveals a stark reality for Americans from underserved communities; this financial illiteracy affects daily life, from renting apartments to qualifying for credit cards. The study delves into the unequal digital wallets of America’s underrepresented communities, highlighting significant gaps in financial education, literacy, and credit opportunities. It identifies financial education as a key to good credit.
According to the survey, 85% of respondents who received personal finance education in school have good or better credit scores, compared to 72% who did not receive such education. Alarmingly, 65% of marginalised non-white participants reported never receiving financial education in school, in contrast to 41% of white Americans.
Further findings reveal that individuals with personal finance education in school are nearly twice as likely (almost 60%) to attain high-income households (over $75,000) compared to those lacking such education (about 33%). The survey also uncovers a racial gap in parental financial guidance, with African American (27.4%), Asian (21.9%), and Hispanic (30.1%) respondents receiving significantly less financial education at home compared to white respondents (49.8%).
FINANCIAL INEQUALITY
Additional insights from the survey include:
- Nearly one in three individuals from underrepresented communities believe financial institutions set unfair interest rates.
- 72% of white Americans surveyed feel that marginalised communities face more challenges in accessing affordable credit.
- 68% of Black Americans believe marginalised communities face additional financial barriers compared to non-marginalised groups.
- Individuals with bad credit (below 670) are more likely to be rejected for apartments (20.5%) than those with good credit (12.9%).
- Poor credit significantly hinders loan and credit card approvals, with those having bad credit twice as likely to face rejection for credit cards (62% vs 31%) and loans (51% vs 23%).
“Throughout this survey, one theme became abundantly clear – low credit scores hold people back and create challenges for everyday Americans,” stated Adrian Nazari, Founder and CEO of Credit Sesame. “People without financial education are more likely to have low credit, making it harder for them to rent apartments or get loans and credit cards. This isn’t intentional bias, but it creates an unfair situation. The public education system is not equipping everyone with the tools to succeed financially. At Credit Sesame, we have made it our mission to educate everyone so that they have the power and tools to raise their credit score.”
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