The Department of Housing and Urban Development recently revealed
that OneWest would pay $7 million to the California Reinvestment
Coalition [2], after it was found that the bank was biased against
certain applicants who wanted to apply for mortgages. Latinos and
African Americans found it harder to apply for loans, and the entire
process seemed unconstitutional. With judgment awarded in favor of
disparaged customers, banks might think twice about applying bias
before awarding finance. While OneWest is not the first to cross the
line in terms of biased lending, legal pressure might force a more
libertarian view [3] on making opportunities available to everyone.


For minorities working hard to build their credit score, they might
have to work even harder, as an algorithm already calculates to
score [4] slightly biased against them. This means that minorities
have to work a little harder to get the same access to credit – and
the cost of credit – like others who aren’t part of minority
groups. Social information, geotargeting, and even previous job
applications can be scraped on the internet to determine whether
borrowers can be trusted.


The biased effect of the credit score runs deeper than being turned
down for a loan. Applicants who do qualify, have to scrape the
bottom of the barrel in terms of interest rates. The median credit
score for nonwhite cities [5] is below 660, and can go as low as
600, with the white areas running median credit scores of up to 100
points higher. The difference this makes is significant, as the rate
of credit for the lower-score bearer will be much higher than those
in predominantly white areas. However, there are financial
institutions who have much to gain by elevating clients out of their
financial situation [6] by providing them with financial products
that elevate credit scores without placing these institutions at


Access to credit opens up room for families to own a home. This
means that it gives families a foothold to build wealth, which they
may not previously have been able to do. Owning a home is the first
step for a family to have a substantial asset [7] with which to
provide for future generations, as it forms a financial legacy. By
denying minorities access to credit to purchase their homes purely
from a racial bias perspective, is to deny them the opportunity to
elevate the financial standing of their family.

While libertarian views are to ensure free and fair access to credit
to everyone, this shouldn’t encourage financial institutions to
prey on people who may not understand their products fully. Instead,
there should be a fair meeting ground where both parties can come to
an amicable agreement that allows both to flourish and to fulfill
their end of the contract.


Jennifer Oswald