The Federal Reserve has studies the disparity in lending to Whites and Non-Whites, and it has concluded that nonwhite have received fewer opportunities to borrow money due to lower credit scores.
According to the new Fed report “Credit Availability and the Decline in Mortgage Lending to Minorities After the Housing Boom,” nearly 45 percent of black borrowers and 29 percent of Hispanic borrowers had credit scores below 620 in 2006, compared to 15 percent of white borrowers. But after the 2008 financial meltdowns, most lenders would not originate mortgages to borrowers with low credit score.
By 2014, roughly 17 percent of Black borrowers and 12 percent of Hispanic borrowers had credit scores below 620, compared with five percent of White borrowers. By 2014, Black and Hispanic borrowers with scores between 580 and 619 comprised a scant 0.71 percent and 0.6 percent of mortgages originations, respectively, below the 2006 levels of 1.7 percent and 1.5 percent.
“Since 2006, the shares of home purchase mortgages to black and Hispanic borrowers declined significantly,” the Fed report stated, adding that its research “provides evidence that most of the decline in black and Hispanic market shares have come from borrowers with low credit scores (less than 620). Within the white population, low-score lending has also declined sharply, but, historically, a much smaller fraction of White borrowers have low credit scores compared with Black and Hispanic borrowers. Tighter credit conditions since 2006 has therefore had a disproportionate effect on minorities' credit access.”
