Money Monday: Credit Score Secrets You May Not Control

Credit score concept. Vector illustration of credit score scale with arrow.

Plus, how much do you plan to spend for Valentine’s Day? Will you go into debt for it?

February is the month when Black History is celebrated. But when it comes to finances, people of color find themselves in spaces and places where celebration is difficult. One of those areas of finance where great challenges remain are credit scores. In urban communities when someone says they have street cred, that usually means they have the acceptance and respect of people who live in underserved communities. However, today many African Americans do not feel respected and accepted by financial institutions and businesses when it comes to finances. The result is that they end up paying more and higher prices to obtain the American dream.

Increased Credit Scores Despite Debt

According to the Federal Reserve Bank of New York, credit card balances today, exceed one Trillion dollars and are at the highest levels they may have ever been. While the debt is mounting, people’s credit scores seem to have increased over the past two years. One reason for this inverse relationship can be found in the Covid-19 stimulus. During 2020 and 2021 many individuals took advantage of free money to pay down their debt. The world came to a halt and they were able to use that extra money to set themselves free.

According from the Government Accountability Office (GAO), many people increased their credit card payments by $20 to $61 after receiving stimulus money. This has led to increased credit scores in general.

There have been other changes and events which have led to higher credit scores to the general population. Among these are changes in credit reports where medical bills under
$500 can no longer appear on your credit report as of April 2023.

Still another factor for increased credit scores despite mounting consumer debt is the job market. In November 2023 according to the Bureau of Labor and Statistics (BLS) the unemployment was almost at a record low of 3.9%. The BLS report indicated that hourly wages increased by 4.1% from twelve months ago and that wages grew overall. But those disconnects are now reversing as COVID spending, inflation and economic realities have begun to settle in and no real credit score changes have occurred for African Americans.

What is your Credit Score

According to the latest research from the Urban Institute , the average African Ameican held a credit score of 677. However among younger African Americans the median credit score is 582. If you you know anything about credit scores, at the basic level you know that any score below 600 is considered subprime. Subprime means that you pay at least twice as much in interest for an item. But what troubles me the most about the research is that young adults in minority communities are also more likely to have their credit scores decrease as they age. What!?

This simply means according to this research, the future of black Americans with regards to credit scores does not seem promising, especially those who reside in black communities.

Understanding the elements or factors influencing your credit score can be confusing to a system that is “rigged” to use a presidential term. For example I know someone who had an above 800 credit score, but because they reduced their debt by paying off their car note, their credit score dropped. In other circumstances, when credit cards are paid off, the line of credit amount is reduced.

What we are now finding out according to the research, is that credit scores may have less to do with your individual behavior and more to do with your family household resources. Due to redlining laws and discrimination, blacks were historically denied access to acquiring wealth through homeownership. Therefore many do not have the resources and assets to build wealth and to pass it on to generations. If you have fewer resources from which to draw,  from the lenders’ and credit score perspective, you are more of a risk. If you’re more of a risk,  that can lower your credit score. This is not to say that individual behavior and responsibility does not matter in credit management; but just know that your score may have less to do with your behavior that your household resources.

Finally, most people are familiar with FICO scores as opposed to their VantageScore. If you use the VantageScore credit model as opposed to a FICO credit score model, some things are weighed more heavily than others and African Americans my find it difficult to obtain higher scores.



Today’s What’s Up is about Valentine’s Day. According to the National Retail Federation consumers plan to spend 14.2 Billion on gifts for their significant others. The highest average amount being spent on a person is $137.00 this year. This year most gifts will be spent on jewelry, followed by eating or dining out. Sadly, 30% of Americans will go into debt to purchase valentine’s gifts. And that’s what’s up!

Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2024. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.

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