Despite the tens of billions of dollars banks pledged by financial services institutions after the death of George Floyd, the racial wealth gap has actually widened since 2020. According to the Federal Reserve Board’s most recent report on racial inequality, median wealth among white families was $285,000 in 2022, compared with $44,900 for Black families. That’s a difference of about $241,000. In 2019, the difference was roughly $191,000. For Hispanic families, the median wealth totaled $61,600 in 2022. That means the wealth gap between Hispanic and white families totaled $224,000, up from roughly $177,000 just three years earlier.

Silvio Tavares, President and CEO of VantageScore, spoke with American Banker about the promise and possibility of fintech in helping close the racial wealth gap in the United States. “When you say to somebody, you are not creditworthy, what they often focus on is not the credit part, but the banker saying, ‘You are not worthy,’” said Silvio.

“Everyone who is creditworthy should have access to a mortgage, which is the key to unlocking financial stability,” he added.

Starting in the fourth quarter, the Federal Housing Finance Agency will require lenders to use VantageScore 4.0 scoring models in order to sell mortgages to Fannie Mae and Freddie Mac. VantageScore 4.0 uses machine learning and trended credit data to assess the creditworthiness of people who have limited credit history. Trended data shows a person’s pattern of financial behavior over a set period of time, generally about 24 months. Tavares estimates that this will enable 4.9 million new borrowers to become eligible for a mortgage and 2.7 million will be able to easily get a new mortgage because their credit score will be above 620.

Read more here: American Banker

To learn more about how VantageScore is helping to close the racial homeownership gap, visit Mortgage.