Giving Compass' Take:

• The Urban Institute has an interactive dashboard that renders a preview of the financial health of 60 major US cities, including data on credit scores which show racial disparities across the economic spectrum.

• The author provides suggestions that cities can do to help the residents that are financially struggling by instituting new policies around employment and financial security.  How can city mayors address the racial disparities between those residents struggling financially and those that are thriving?

• Read about how former inmates in America deal with financial debt after prison. 

Credit scores can perpetuate racial disparities in wealth and financial security, which affect not only people who are struggling financially but the cities in which they live. As we’ve found, residents’ financial health is closely intertwined with cities’ financial health.

A new Urban Institute interactive dashboard provides a snapshot of the financial health of 60 major US cities. The Financial Health of Residents dashboard uses various data to group cities with common characteristics into peer groups, like economically stable cities with high housing costs (e.g., San Francisco) and cities in economic recovery (e.g., Detroit).

Among all the data included in the dashboard, credit score data reveal how racial disparities persist in cities across the economic spectrum from prosperous to struggling.

Cities can employ policies to help create an equal playing field and help more people gain a foothold and contribute to the local economy:

  • Assess city debt collection practices and provide constructive options for families to repay city debts, such as city-owned utility debts and city-imposed fines or fees.
  • Assess city employment practices and take steps to boost city employees’ financial security.
  • Protect consumers from unfair, deceptive, or abusive business practices by enforcing municipal consumer protection regulations, collecting consumer complaints, and educating businesses and consumers.
  • Create financial inclusion programs that support more financially vulnerable residents.

This new dashboard provides insight into which cities have more prosperous residents and which cities have more financially challenged residents. All U.S. cities should create an environment where residents can quickly recovery from financial hardship and where prosperity doesn’t leave some residents behind.

Read the full article about credit scores and racial disparity by Caroline Ratcliffe and Steven Brown at Urban Institute.