What Blacks need to know about credit

Ashley Montgomery | 8/21/2014, noon
While some took advantage of their summer by visiting the beach or relaxing at the pool, others decided to build ...
Branch Manager, Ernst Joseph talked about rebuilding credit and how lenders make credit decisions at the workshop. Photo by Ashley Montgomery

While some took advantage of their summer by visiting the beach or relaxing at the pool, others decided to build their financial IQ. Throughout July and August OneUnited Bank presented Smart Money Summer School. Branch Manager Ernst Joseph and his staff conducted workshops to help consumers develop financial action plans and provided them tools to better understand credit.

The workshops were held at the bank's Miami location, 275 NW 79th St. The classes showed participants how to rebuild credit and understand credit reports. Instructors also explained how lenders make credit decisions. Joseph also took the time to clarify misconceptions and myths about credit.

Metris Batts, a woman who attended the workshop, voiced concerns about certain stigmas Blacks have towards credit.

“My grandparents taught me to pay everything in cash,” Batts said. “Because that way, I own everything that I purchase.”

Joseph didn’t refute Batts' beliefs. However, he offered advice on why avoiding credit cards altogether may not be the best option.

“Even if you have credit cards that you don’t use — credit is important,” he said. “It’s important because there will be a time in your life where you want to get a home, a car, own a business where you will need a loan — credit is going to be something that you need.”

One thing many Blacks aren’t aware of is that bad credit can prevent one from obtaining a job.

Although Blacks are in less debt today than they were in 2008, during the Great Recession, many still face significant financial strains compared to others, according to a report by the NAACP and Demos, a public policy organization.

Approximately 42 percent of Black households in debt are borrowing to make ends meet and to pay for basic expenses, like groceries, rent and utilities.

"Borrowing to pay for basic expenses only delays financial problems . . . it does not solve them," Williams said. "If someone is facing financial stress, they have to ask, 'Am I making enough to live, but spending too much or am I not making enough to pay for basic expenses?' The answer to that question will help build the right road map to reduce financial stress." One woman asked a very interesting question that sparked a heated debate among participants. She asked if parents who use their child's social security number to open an account, are guilty of fraud and would this negatively affect their child's credit. The answer to that is: Yes.

In an impromptu discussion, the consensus among workshop participants was that the reason for Blacks having more trouble attaining good credit than other races is because of the lack of education.

“Other races understand that from a young age, other races have the one-up on us [Blacks] because they know and understand the importance of building wealth,” Joseph said.

“That’s why by the time they finish college they can walk into a bank at age 24 and be qualified for an $100,000 loan. Unfortunately for us, by the time we turn 25 we can't do that because we have maxed out 10 credit cards.”

From a newlywed couple seeking homeownership to entrepreneurs looking to improve the relationship between their bank and business, once the workshops concluded everyone was thankful for the free services by OneUnited.

“Self-esteem is tied into your credit score,” Batts said. “It’s important that we increase awareness about these issues.”

Wayne Davis, CEO of In Touch, has been to the workshop twice.

“I wanted to be educated about credit repair,” he said. “I wanted to find out about better opportunities to enhance my credit and build a good relationship with my bank. I thank OneUnited for getting us informed. There is a way to start correcting it.”

The final workshop will be held on Tuesday, Aug. 26 from 6 p.m. to 8 p.m. To register visit www.oneunited.com/workshop.