Do we as black people have bad credit?
After looking at some debt demographics of minorities with outstanding balances on a credit card we are at about 24 percent. However, after White and Hispanics we rank third for having our income invested in assets. This means we aren’t investing in our tomorrows, but we spend for our today and have the mentality “I will pay the minimum and keep it moving”. I honestly don’t think most black people have bad credit nor do statistics from 2007 onward show that we are the worst off in the credit score game, but we are not the best off either.
I think that good credit and debt practices come from heredity and what we learn growing up. As a community we may buy ourselves and our families material things but don’t explain how we are able to and that leaves the next generation at a disadvantage. Also, if we have to look at the facts, economically and socially, a part of our black community lies in the middle class range or lower.
It is a cycle that repeats. If we don’t learn to invest in things for tomorrow and we spend to keep up with our neighbors than we are at a loss and we fall into bad credit practices. It’s not that you should just stop making purchases or stop charging things to your credit card, but also take a look at what you are purchasing with your card. Is it a want or need? When taking a step back to see what you are purchasing with your Visa, MasterCard, or Amex, are you paying attention to how much of the balance you are paying back? Additionally, you must consider how much of that balance do you pay back before you even think about sliding that card again?
It’s also not just credit cards that damage your credit score but student loans, maybe moving out before you were actually financially ready, and any bill that goes delinquent. All of these can affect your score. Besides the ones you forget to pay, the active balances of each appear on your score which affect house owning, car purchasing and sometimes depending on your field of expertise, job hunting.
It is my personal opinion that maybe we don’t have the greatest credit. However, we aren’t talking about credit and money as we should be. I can use my own story as an example. The only person in my family that really told me about saving was my Nana. She survived the Great Depression and had a different outlook on money. You don’t spend what you don’t have and if you need a magic card to pay for something, you don’t need it. While my mom is a save her money type person, she’s also a big I’ll just slide my card person. But at age 18, when offered my first credit card I was like sure this could work out! I would pay my minimum and keep it moving and it was fine for a couple of years. The thing I noticed though was that I wasn’t actually paying my balance off completely. Finally when I wasn’t working for a period of time and the bills became past due I freaked out! No one had taught me how to deal with that part and after a tearful phone call to my mom, the solution we found was debt counseling and consolidation. At 25, I am in debt counseling to manage my student loans and two major credit cards.
I never thought to say no to those cards or maybe take less in loans for school. Society and just from what I saw around me and in my community, said that’s a means to an end. But the end it gets you and it is not the end you thought you were signing for. No one reads the fine print. No one teaches us to read the fine print.
We don’t have bad credit. We have bad credit practices!
Sometimes you have to step back when making a purchase and ask your self could I buy this out right with cash right now. If not and it’s not a need for life and giving you shelter, food, or practical clothing maybe it’s better to walk away and not slide your card, adding 25$ to your already 200$ balance.
We need to start talking about our finances, among our families, churches, friends and communities. We can’t raise our standing in life if the ground we are standing on is on loan only.