The wealth gap in the United States is no secret. It’s a deeply ingrained disparity in financial resources between different income groups. From education and healthcare to homeownership and retirement savings, it has ripple effects on nearly every aspect of American life.
Did you know that a better credit score could play a key role in helping to close this gap while improving your individual situation? At CredEvolv, we’re committed to empowering individuals to take control of their financial futures through credit improvement. We believe it’s one of the most actionable steps toward building wealth and fostering financial equity.
What is the wealth gap in America?
The wealth gap refers to the unequal distribution of assets among individuals and households in a society. According to the Federal Reserve’s 2022 Survey of Consumer Finances, the top 1% of households in the U.S. control about 34% of the country’s wealth, while the bottom 50% hold just 2.5%.
This divide is even more pronounced when analyzed by race. In 2019, the median net worth of white households is $188,200, compared to $24,100 for Black households and $36,100 for Hispanic households.
These gaps stem from systemic barriers to wealth-building opportunities, including access to affordable credit, homeownership, and investment tools. Credit plays a pivotal role in this equation. It can either serve as a stepping stone to upward mobility or a barrier to progress.
A good credit score can unlock lower interest rates on loans, qualify you for better credit cards, and help you secure approvals for significant investments like a mortgage.
Why does credit matter in wealth building?
Your credit score is more than just a number. It’s a reflection of your financial health and trustworthiness in the eyes of lenders. A good credit score can unlock lower interest rates on loans, qualify you for better credit cards, and help you secure approvals for significant investments like a mortgage. On the flip side, poor credit can lead to higher borrowing costs, fewer financial opportunities, and a cycle of debt that makes wealth accumulation nearly impossible.
What is the role of homeownership in closing the wealth gap?
Homeownership has long been one of the most effective ways to build generational wealth. A home isn’t just a place to live – it’s an asset that can appreciate over time and provide a financial safety net.
In 2022, the wealth gap between owners and renters reached a historic high and is showing no signs of slowing down as 2024 draws to a close. Barriers to homeownership disproportionately affect minority and low-income communities, perpetuating the wealth gap. Poor credit is among the largest of those barriers.
A higher credit score can mean the difference between being approved for a mortgage with a manageable interest rate or being denied altogether. For example, someone with a credit score of 760 or higher might qualify for a mortgage interest rate in the upper 6% range, while someone with a score of 620 might face rates closer to 8% or higher. Over a 30-year mortgage, that difference could cost tens of thousands of dollars in additional interest payments.
How can CredEvolv help me improve my credit?
Improving your credit score might feel like an insurmountable challenge, but it’s a goal within reach. That’s where CredEvolv can help.
Our platform connects you with certified, nonprofit credit counselors who are experts in guiding individuals through their credit improvement journeys. Here’s how working with CredEvolv can set you on the path to better credit and, ultimately, wealth-building opportunities.
- Personalized credit strategies. Everyone’s financial situation is unique, and there’s no one-size-fits-all solution for improving credit. Our credit counselor partners take the time to understand your financial picture and develop a tailored strategy. Whether you’re dealing with high credit card balances, a history of late payments, or minimal credit history, they’ll work with you to create a clear, achievable plan. Traditional credit repair companies don’t always do this, which is one of the pitfalls of working with them.
- Education and empowerment. Understanding how credit works is crucial to improving and maintaining a strong credit profile. The counselors on the CredEvolv platform provide education on topics like credit utilization, the impact of inquiries, and how to manage existing debts effectively. With this knowledge, you can make informed financial decisions that will benefit you in the long run.
- Accountability and support. Staying consistent with your credit improvement plan can be challenging, especially when life throws you curveballs. Having a counselor to guide and encourage you makes all the difference. Yours will celebrate your progress, help you overcome obstacles, and keep you focused on your goals.
- Pathways to homeownership. For many of our clients, the ultimate goal is to become a homeowner. Our counselor partners can help you understand the steps needed to qualify for a mortgage, from improving your credit score to reducing debt-to-income ratios. With a solid plan and ongoing support, you can turn the dream of homeownership into a reality.
How can credit improvement be used as a tool for wealth building?
Improving your credit isn’t just about getting approved for loans. It’s about creating long-term opportunities. With better credit, you can:
- Save on interest rates. A better credit score can potentially lead to lower interest rates. That means less money spent on borrowing and more money available for saving and investing.
- Start a business. Access to affordable credit can make it possible to launch or grow a small business, a key avenue for wealth creation.
- Build an emergency fund. With fewer financial barriers, you can allocate more resources to a safety net that protects against unexpected expenses.
By taking these steps, you’re not just improving your own financial health – you’re contributing to the broader goal of closing the wealth gap. When more individuals have access to credit and opportunities to build wealth, the entire economy benefits.
A brighter financial future starts today
At CredEvolv, we believe that financial freedom should be attainable for everyone, regardless of their starting point. By improving your credit score, you’re taking a powerful step toward building wealth, achieving your goals, and creating a more equitable society.
If you’re ready to take control of your financial future, our team of certified credit counselor partners is here to help. Together, we can pave the way for a brighter, more prosperous tomorrow for you and your family – today and for generations to come.
Get started today! We look forward to working with you.