Access to credit is an essential aspect of financial health and well-being. Without it, individuals and businesses may find it challenging to purchase homes, start businesses or even get an education. However, access to credit has not always been equitable, diverse, or inclusive. In fact, historically, credit was denied especially to people of color, women, and other marginalized groups, leading to systemic inequalities and perpetuating economic disparities. This Black History Month, we explore the role that access to credit plays in supporting the economic enfranchisement for all.
In recent years, credit bureaus and data analytics firms have been working to address these issues and promote diversity, equity, and inclusivity in credit access. Here are some of the ways they are working to make credit more accessible to everyone:
Removing bias from credit scoring models
Credit scoring models have been criticized for being biased against people of color, women, and other marginalized groups, where these persons may have been penalized for having limited credit histories making it more difficult for them to access loans. EveryData, as a credit bureau, has worked assiduously to ensure our credit scoring models consider market-specific consumer behavior as no two models are the same. This approach, along with the inclusion of non-traditional sources of credit data has a leveling effect for persons who lack traditional loan data with which to otherwise generate a consumer credit report. This, however, places equal responsibility on the latter agencies, e.g. utilities, micro-lending institutions and other credit providers to share their information with bureaus like ours.
Increasing access to credit education and resources
Lack of financial literacy and education is a significant barrier to credit access for many individuals. Credit bureaus and data analytics firms are working to provide more educational resources and tools to help people better understand credit, build credit, and improve their credit scores. In the very near future, we plan to unveil new technology to make decision-making around accessing credit easier for borrowers and actively use our social media to this same effect.
Emphasizing diversity in hiring and leadership
To promote diversity, equity, and inclusivity in credit access, credit bureaus and data analytics firms are making a concerted effort to hire and promote individuals from diverse backgrounds. At EveryData, we are an equal opportunity employer committed to hiring the very best individuals to our team and are proud of the extent to which this has created a diverse workforce to date. Indeed, these individuals help to ensure that our plans and programmes reflect the multicultural nature of our marketplace.
Engaging with community organizations and advocates
Credit bureaus habitually engage with community organizations and advocates to mount valuable public education campaigns and, in so doing, are better able to understand the needs and concerns of these and other often marginalized groups. This then leads to the creation of more market-specific solutions that lend to greater inclusivity and improved access to credit. EveryData is actively seeking to establish working relationships with such agencies and influencers in the markets we serve and look forward to the outcomes of these burgeoning partnerships.
In conclusion, credit bureaus play a crucial role in determining creditworthiness and access to credit and, stand to benefit traditionally marginalized communities by deliberately embracing the principles of diversity, equity, and inclusivity. Through efforts to remove bias from credit scoring models, increase access to credit education and resources, emphasize diversity in hiring and leadership, and engage with community organizations and advocates, credit bureaus and data analytics firms are working to build a more inclusive and equitable credit system. In doing business with EveryData, you can rest assured that we are committed to democratizing access to credit and educational resources, cognizant of the impact it has on engendering sustainable socio-economic development for all.