African Americans, Asian-Pacific Islanders, and Hispanics have more errors on their credit reports than white counterparts, and women of color have it worst. That’s not to say those errors are justifiable. What it does say is credit-reporting errors are detrimental to one’s borrowing potential. Let’s take a look at auto loans for example.
Auto loans are the third-largest household debt in the United States according to the Consumer Financial Protection Bureau (CFPB). As recently as 2016, discriminatory loan practices occurred against two minorities groups.
The CFPB and the US Department of Justice reached a $21 million settlement against Toyota Motor Credit for targeting minorities for higher auto loan rates regardless of the borrowers’ creditworthiness.
Toyota Motor Credit didn’t personally redline these consumers but allowed for auto dealers to markup prices excessively and unwarranted. Read all about it here.
Being aware of what’s reporting negatively on your credit reports is crucial, especially if you’re planning on getting financing in the near future.
You don’t have to be perceived as having poor credit. According to the Fair Credit Report Act (FCRA), you have the right to take necessary action to improve your overall credit standing.
4 Things You Can Do Today:
Order a copy of your three credit reports and look them over carefully for errors
Dispute any errors reporting that are inaccurate and unverifiable
Open an account with your local credit union
Get pre-qualified with the credit union for an auto loan
Once you implement these four steps, consider yourself an educated consumer. You’ll know what interest rate you qualify for, ultimately putting yourself in the driver’s seat to closing the door on poor credit and discriminatory practices.
If you need help reviewing your credit reports, click this link below for more information: