How low credit scores and structural racism can create ‘resignation, weariness and despair’ in Black consumers

Credit scores typically range from 300 to 850 and are calculated based on a person’s on-time payment history, the length of their credit use, and whether they’re responsibly using that credit, among other factors. 

But those who haven’t experienced pain in the credit or banking system might not understand that a low credit score doesn’t just cut off access to financial opportunities. It can also create psychological stress that weighs on a person’s self-image.

What is ‘meta-oppression’?

Less than a quarter of U.S. high-school students receive any sort of standalone personal-finance education before they graduate, according to one 2022 report, and that’s an improvement from the 16.4% of students who received that kind of education in 2018. One online survey conducted in late 2018 found that 37% of Americans had no idea how their credit score was even determined. 

The reality is that a “poor” credit score, or one between 300 and 579, can lock someone out of renting an apartment or saddle them with higher interest rates, making them a financial outcast until they’re able to turn their rating around — which can take months or years, depending on what dragged their score down in the first place. Even a “fair” credit score, which falls between 580 and 669, can cut off access to more affordable financial products.

The people with the lowest median credit scores, meanwhile, also tend to be those who already face other financial hurdles due to structural racism, including discrimination in financial services, residential segregation and suppressed opportunities for wealth-building. Majority-Black communities and majority-Native American communities have not only the highest shares of residents with subprime credit scores, but also the highest debt-in-collection rates and use of payday and other non-bank loans, the Urban Institute has found.

All of these experiences with systemic racism contribute to something called “meta-oppression,” a term coined by Jacqueline Scott, a philosophy professor at Loyola University Chicago, and further explored in a study of Black Chicagoans’ experiences with the credit system published earlier this year.

That study, jointly led by Kassandra Martinchek, a research associate at the Urban Institute, and Rose Mary Brown, the chief strategy officer at Working Credit, a nonprofit credit-counseling organization, found that structural racism in the financial system — whether through credit scoring, lending, inequitable homeownership or other means — fosters a lack of hope and agency among Black consumers. 

Such feelings of despair resulting from systemic discrimination are considered meta-oppression, with Black consumers looking at themselves through the lens of institutional racism and seeing themselves as permanently stuck, according to the study.

Historically, Black Americans have been denied credit or capital through systems like sharecropping, in which formerly enslaved people were granted rented land to farm in exchange for, ostensibly, portions of their crop yield, only to often be trapped in debt; and redlining of neighborhoods, which blocked Black residents and other people of color from securing mortgages. Black Americans, in turn, are often deemed financially untrustworthy or uneducated due to that systematic denial of credit and capital. 

The legacy of this structural racism, Martinchek said, is the “significant wealth disparities” that still persist between Black and white Americans. But it has also impacted people’s emotional well-being, the study showed.

“According to Scott, meta-oppression is characterized by feelings of ‘profound resignation, weariness and despair at the looming realization that American racism will not change significantly — ever,’” the authors wrote.

Turning despair into hope

The Urban Institute and Working Credit research involved interviews with 16 Black Chicagoans, all of whom went on to receive financial counseling and coaching offered through their employers by Working Credit. Researchers then analyzed their responses regarding their experiences with the credit system, and identified specific themes. Overall, participants felt they lacked important information and education about credit, as well as access to non-predatory and more effective lending products, and had lower self-esteem due to their financial situation, the interviews found.

Even acknowledging the systemic barriers that had hindered their opportunities, “they still felt fully responsible for their current economic circumstances and placed blame on themselves, took that on and internalized it, and felt lower self-esteem,” Martinchek said.

By the time people come to Working Credit for help, they may feel little to no hope that things will ever change for them, Brown added. 

“People would start to equate having a bad score with being a bad person,” she told MarketWatch.

For example, Boyland, who was not part of the study but sought help from Working Credit earlier this year when her credit score was not quite yet at 700, pointed out that a person with a lower credit score may be subjected to extra scrutiny — oversight that may be warranted, she said, but can also make them feel like there’s no winning. She has previously struggled with finding a desirable place to live, and said a bank once refused to open her an account, citing concern that she would write bad checks. 

Experiences like these made Boyland feel judged based on her appearance and her credit score, rather than on her character. Such treatment can also lead people of color to distrust financial institutions:  Black and Hispanic adults are more likely than their white or Asian peers to lack a bank account or be “underbanked,” meaning they rely at least partly on nontraditional financial services to meet their needs. 

Nobody had tried to help Boyland with her situation, she said, but she also felt so badly that she didn’t want to talk about ways to fix it.

“It’s kind of hard when you’re an African-American person trying to get yourself together, and you have people that make derogatory remarks to you, or they look down on you,” Boyland said. “Especially when you’re looking for an apartment.”

Interviewees for the study also reported that they felt predatory lenders were primarily located in their neighborhoods, or that they were being targeted for products with high interest rates — only to be made to feel they were at fault for using those products, or that there were no other options. The interviewees further blamed themselves for their low credit scores.

To help address meta-oppression and foster hope, policymakers can both address systemic racism and help people understand how it reinforces structural inequality, the report’s authors recommended.

“Despite the ways that structural racism has constrained the possibilities that Black Chicago residents see for their financial futures, policies and programs can explore ways to interrupt meta-oppression by turning resignation to agency, weariness to willingness, and despair to hope,” the organizations said in their study.

Since first contacting Working Credit, Boyland has been able to lift her credit score to “very good,” thanks to nonjudgmental advice on how to pay off her credit cards on time, not maintain a balance and more. Now she feels financially stronger, and also better about herself. 

“I feel empowered,” Boyland said.