During the month of March, many people celebrate St. Patrick’s Day and Women’s History Month.
As a result of these two occasions, most of us have either looked forward to the annual St. Patrick’s Day Parade, or celebrating the magnificent women who have made a difference in our lives and the community.
However, some people may not know that March is also National Credit Education Month. This is a time that can be used to understand what credit really is, what kind of credit we have and how to make it better.
Credit is something that many folks don’t think about until the time comes for us to get something we need or want. To some of us, credit may not be the most exciting topic to discuss. However, it is definitely one of the most important topics to discuss, because it can make the difference in critical situations such as buying a house or car, renting an apartment, getting urgent repairs done or even getting hired for some jobs.
For our readers who already know the dynamics of credit, it may seem like I’m preaching “ABCs and 123s” to the choir. However, I ask you to be patient as you read this, and please understand that there are people who have not had the same kind of financial experiences you may have had.
When I refer to “having the winning score,” I’m not talking about the lottery or betting on the NBA playoffs. I have nothing against these activities, but what I’m referring to is your credit score.
Yes, that little three-digit number that can define a person’s standing in this world almost as much as their Social Security Number — the number that can give you a taste of paradise if it is high, and a shot of tragedy if it is low.
This is not hyperbolic exaggeration. Today’s society places a supreme amount of importance on credit scores and having good credit.
Sadly, however, many people from all backgrounds, cultures, ages and geographic areas sometimes struggle with bad credit. At least for a while, they are forced to do the best they can with a low credit score. This can be due to poor money management or unexpected setbacks, such as medical expenses or being downsized from a job.
Even in our own community, stereotypes about African-Americans and credit maintenance have swirled around for at least a couple of generations, given the aging infrastructure and high prevalence of check cashing places in many predominantly Black neighborhoods.
However, it is important to understand finances in the African-American community from a historical context. Until recent years, many African-Americans have had only limited access to credit and have consistently been denied credit in one form or another.
Historically, Blacks in the South were often sharecroppers who basically lived on the land, or were bound in ridiculous “credit agreements” with the small general stores in their area.
Blacks in the North, meanwhile, could make better money working industrial jobs in the cities, but when it came to major purchases, they often had to rely on resources from financial institutions operated by people outside of the African -American community. Therefore, those resources were not always forthcoming.
Often when they did come, they arrived in the form of predatory loans that locked people in long-term arrangements with ridiculously high interest rates. Study after study has shown that African-Americans have been disproportionately affected by predatory loans, especially in the housing market.
Fortunately, a ray of hope is presented by every African-American who excels at their profession, operates a successful business, owns real estate or, at the very least, is financially stable. These people offer great examples of what can be achieved financially, which is good for our community and America at large.
Thankfully, there are many ways we can take control of our credit and financial destiny.
The first step is to educate ourselves about credit, as suggested by National Credit Education Month. We can do this by finding out what our credit score is and obtaining a copy of our credit report to see how the score was computed. This can be done by visiting the websites of any or all three of the credit reporting agencies: Experian, Equifax and Trans Union.
Basic personal accounting and reviewing the statements of our own bank accounts can also go a long way toward great financial health. Recording how much we spend and where we spend can also help us discover our spending habits, which will lead to better use of money.
If there are current financial challenges or past challenges that don’t seem to go away, it may be good to sit down and talk with a consumer credit counselor. The services of credit counselors are often available for free, especially through organizations that work with groups such as first-time home buyers, seniors and veterans.
Enrolling young people in programs such as Junior Achievement and the Dollars and Sense initiative by 100 Black Men of Indianapolis can show them how much better their lives can be if they maintain excellent credit, save some of their money and use other smart financial practices.
Taking these steps can improve our financial standing as individuals and also make our African-American community stronger in the sphere of influence that some could say actually runs this country: the economy.
Making the average credit rating in our community stronger will increase our purchasing power, which is already more than $1 trillion, according to various government statistics. This approach will make us more relevant as a consumer demographic group in the economy.
More importantly, improving credit will also raise our potential as producers in the economy. In other words, higher average credit will make it easier for us to obtain capital, equipment and resources needed to start businesses in our community. Of course, these new businesses can provide a major boost by offering good paying jobs.
As wonderful as this vision is, however, we must remember that it all starts with us.