WASHINGTON (AP) --Almost half of blacks have bad credit, nearly
twice the rate of whites, mortgage lender Freddie Mac reported
today in announcing a joint initiative with black colleges to teach
minorities good spending practices.
"Our goal is to ensure that as many families as possible have
the opportunity to own a home," said Leland C. Brendsel, chairman
and chief executive officer of Freddie Mac.
"Increasing the pool of qualified minority home buyers will
play an important role in future expansion of the home mortgage
industry," Brendsel said. "This initiative is not only good for
our nation but makes good business sense."
The mortgage lender in January awarded $1.3 million to five
black colleges to conduct a national credit survey. The colleges
participating are Benedict College in Columbia, S.C., Clark Atlanta
University in Atlanta, Florida A&M University in Tallahassee,
Howard University in Washington and Saint Augustine's College in
The study found that while bad credit crosses racial and
economic lines, it is especially pervasive among blacks.
Among all respondents, 30 percent had bad credit records. About
47 percent of blacks and 34 percent of Hispanics had bad credit.
Among whites surveyed, 27 percent had bad credit.
Bad credit is defined as those consumers who have been either 90
days late on a payment in the last two years or 30 days late on a
payment more than once in the last two years or have a record of
delinquent liens, public records or bankruptcy.
The schools and Freddie Mac are analyzing the results to develop
an initiative to help consumers obtain and maintain good credit.
The National Urban League and the NAACP have agreed to help
implement the project, which will include distributing an
educational curriculum for teen-agers and young adults.
Some universities are already looking at ways to incorporate the
spending lessons in students' curricula.
Arthur Washington, dean of the College of Arts and Sciences at
Florida A&M University, said the school plans to offer a course in
its economics department and business school.
"We want to start in the fall. If not the fall, we'll
definitely try to start in January," Washington said.
Washington said the problem extends across all income brackets
and solving it will require lessons to help people not only obtain
credit but manage their money wisely.
"It's not just simply a poor person without money trying to get
what they see as the American dream. It's one who has met the
American dream but cannot manage money," Washington said.
Indeed, the Freddie Mac study found that among people with
incomes under $25,000, 48 percent of black borrowers had bad credit
while 31 percent of white borrowers had bad credit. And even in the
$65,000-to-$75,000 income bracket, 34 percent of blacks had bad
credit compared to 20 percent of whites.
Forty-six percent of blacks own homes, compared with 72 percent
of whites. Poor credit is often cited as one of the leading factors
in rejection of mortgage applications.
The 12-page survey was mailed to over 20,000 consumers between
the ages of 20 and 40 with incomes up to $75,000. There were about
12,000 respondents. The margin of error for the survey is plus or
minus 1 percentage point.