LOS ANGELES, August 22, 2022 /PRNewswire/ — FinanceJaran educational website that provides advice on credit and personal finance, announced the results of a poll which clarified several long-standing controversies in the credit industry.
“Our results challenged several pieces of conventional wisdom, providing unprecedented insight into why credit scores appear to be biased by race,” said Elena Jones, personal finance expert and co-founder of FinanceJar. “In a few cases, they also challenged our own assumptions.”
FinanceJar surveyed 700 consumers in the United States and collected data on their demographics and credit scores. Although the results confirmed Experian’s previous findings on the relationship between credit scores and income, education level and age, they contradicted other common beliefs about credit score and the race.
There are stark disparities between the average credit scores held by consumers of different racial backgrounds, with white and Asian consumers having significantly higher credit scores than Latino and black consumers. Credit industry observers have offered many different explanations for this. An analysis of FinanceJar data suggests that the disparity is almost entirely due to racial differences in average income level.
After adjusting for income, the difference between the average credit scores of people of different racial backgrounds becomes much more subtle and complex. Surprisingly, in a lower-middle-income bracket, the usual pattern reverses, with white respondents reporting lower scores on average than black and Latino respondents.
FinanceJar also analyzed the relationship between credit and body mass index (BMI). Several researchers have postulated a relationship between socioeconomic status and BMI, with low-income people being more likely to be overweight. Surprisingly, the opposite is true; according to survey data, people who are moderately overweight (with a BMI between 25 and 30) actually have the highest credit scores on average, and low-income people aren’t much more likely to be obese.