Native Credit Scores Getting Better!

Mark Fogarty

Credit scores on American Indian reservations increased in 19 states between 2002 and 2012, a meeting on mortgage lending in Indian country heard.

Miriam Jorgensen, research director at the Native Nations Institute, the University of Arizona and also the Harvard Project on American Indian Economic Development, presented data to a Center for Indian Country Development conference in Scottsdale, Arizona. that showed credit scores at reservations in one state, Wisconsin, approached the “very good” level of 740 and above.

Eleven of the 19 states (California, Colorado, Idaho, Michigan, Minnesota, Montana, Nebraska, Utah, Washington, Wisconsin and Wyoming) had mean (average) credit scores above 670, the level deemed “good” by credit rating company Experian.

Two other states, North Dakota and South Dakota, were just under the good range, while Arizona, New Mexico, Nevada, New York, Oregon and Oklahoma were in the “fair” range. Arizona had the lowest average credit score at 610.

The credit score gains ranged from tiny (California and Michigan) to substantial (Arizona and North Dakota). Mortgage lenders use credit scores to determine who they will lend to.

The data, from a 2014 Working Papers study on consumer credit on American Indian reservations (Dimitrova, Grajzl et al) included all residents on reservations, Native and non-Native.

Jorgensen quoted the same study that showed average credit scores within all reservation boundaries increased during the decade to just below the 670 “good” score. Areas that straddled Indian land or were adjacent or nearby all had averages between 690 and 700.

She also cited data from a study by Four Directions Development Corp., a Maine-based Native CDFI (community development financial institution) that tracked 30 individual credit scores between 2002 and 2014. The average for their members increased from around 620 to around 650.

In other data presented to the conference, Jorgensen quoted Home Mortgage Disclosure Act data sets for 2003 to 2006 that showed Native mortgage applicants on or near Indian land in eight states had a higher denial rate than for all applicants in the state.

Native applicants in the eight states (Alaska, Arizona, California, Oregon, Washington, Montana, Colorado and Oklahoma) also applied for proportionally more manufactured housing loans and home improvement loans.

Jorgensen’s data showed that Indian income levels have been rising between 1990 and 2010. Quoting a 2014 study by Akee and Taylor she revealed real per capita Indian incomes have increased from $8,289 in 1990 to $12,142 in 2006-2010. These numbers excluded the Navajo reservation, which was looked at separately.

For the whole country, per capita incomes went from $24,951 in 1990 to $27,798 in 2000 and then down to $26,893 between 2006-2010 as a result of the Great Recession. Indian incomes did not show a similar drop.

Navajo country incomes were lower than both, at $6,525 in 1990 rising to $9,787 in 2006-2010. For all Indian areas (including statistical areas), per capita income rose from $9,112 in 1990 to $12,459 in 2006-2010.

The Center for Indian Country Development, associated with the Minneapolis branch of the Federal Reserve Bank, is studying several areas of potential growth for Indian nations, including mortgage finance and education.

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