For National Hispanic Heritage Month, we're celebrating the contributions of Hispanic and Latinx Americans in the financial space. And we're empowering others in the Hispanic community to pursue avenues of financial independence and security. Let's take a closer look at some of the challenges that Hispanic communities commonly face when it comes to credit—as well as some financial empowerment strategies.
Money management is not traditionally talked about in many Hispanic households, presenting a huge hurdle to financial empowerment.1 While achieving the American Dream involves financial wellness and financial freedom, Hispanic families have had fewer opportunities to build generational wealth.2 Low household income and stagnant wages have contributed to these financial health challenges.2
A lack of access to credit and low credit scores impact Hispanic individuals in several areas, from mental health to the ability to get a car loan or lease a cell phone.3 Many Hispanic Americans feel they're at an inherent disadvantage within the credit system—nearly one in three (30%) say there aren't fair credit options for people like them.3
Yet Hispanic people have played a major role in driving U.S. population growth over the past decade, reaching 62.5 million in 2021.4 That's a large bulk of society with limited financial potential.
And Hispanic Americans are far behind white households when it comes to saving and wealth accumulation. One report shows that 17% of Hispanic households are less likely than white households to have access to a retirement plan.5 Data also reveals that Americans of color generally opt out of applying for credit because they assume they'll be turned down—making it harder for them to build credit and obtain financing.6
Even as equal credit opportunity is a critical first step toward helping close the racial gap in our society, having the right resources and tools can create more credit awareness and impact Hispanic individuals' financial and psychological wellness. Here, we'll explore why credit education is so important for the Hispanic community, and how learning these essential skills can help build confidence and long-term financial security.
1. Boost Credit by Participating In financial Literacy Programs
Talking about money may be a taboo subject in many Hispanic households, but it's one that can be removed by using established road maps for improving money decisions—like those found in financial literacy programs. This is one of the first steps in learning money basics so that families can start talking about bigger-picture goals. A few resources to tap into include:
- • The Hispanic Center for Financial Excellence offers a holistic approach to helping individuals understand and successfully navigate the U.S. financial system and build credit history. They can also help people manage a monthly budget and credit, dispute any errors on credit reports and start saving for long-term financial goals.
- • Qualitas of Life Foundation has developed a wealth of resources to ensure that thousands of immigrants and first-generation Hispanic Americans have the tools to take control of their finances and break the cycle of poverty.
- • Hispanic Access Foundation works to help individuals improve their financial literacy to ensure a better future in the United States. Specifically, the organization offers advice and works to connect the Hispanic population with a wide array of financial tools.
2. Utilize Bilingual Resources to Improve Credit Literacy
Bilingual resources—like the ones below—can help Hispanic families and individuals stop living paycheck to paycheck and learn how to manage their money, invest, build their credit score and create generational wealth. A few resources to consider:
- • GCF Global provides free courses in Spanish, with resources and advice that help empower people to take control of their finances.
- • Consolidated Credit's Centro de Educación Financiera is a free financial library in Spanish that covers how to create budgets, save money, manage debt and credit cards and improve your credit score.
3. Find a Money Mentor to Help Build Credit
Many Hispanic families distrust financial institutions and don't have bank accounts, choosing instead to save any spare cash at home. One survey showed that in 2021, 9.3% of Hispanic households were unbanked, compared to just 2.1% of white households.7 A money mentor can help take away many fears by helping people navigate challenges and providing them with financial guidance and support.
That said, it's important to avoid potential scams and find a credible coach with a solid track record of working in finance, investment or financial planning. You should also check to see if they have credentials such as Certified Financial Planner™ or Chartered Financial Analyst®. Make sure to always research the mentor's reputation online. Look for reviews, testimonials and references from previous clients. You can also search for any news articles, publications or interviews that mention them.
Here are some of the ways a mentor can help improve financial literacy:
- • They can help you create a plan. Money mentors must listen in order to understand your financial picture, and then brainstorm solutions to help you meet your goals. For instance, they can help you get the most out of your credit card, put a plan in place to eliminate debt, figure out how to increase your income, learn to invest and manage your spending.
- • They can build your confidence. Free personal financial coaching like Stand By Me Hispano offers a one-on-one relationship with a professional coach who can help you identify financial goals, develop new habits and break old ones, as well as give you the tools to improve your finances.
4. Follow Credit-savvy Hispanic Financial Experts
As Hispanic households are reluctant to discuss money matters, YouTube channels, podcasts and social media can provide a nonthreatening entryway to financial literacy for many families. There are numerous Hispanic financial experts who are creating more awareness around topics like saving for college, paying off student loans and credit card debt and retiring early.
While there's a vast amount of content available, it's important to discern between genuine experts and self-proclaimed gurus. Similar to finding a money mentor, before you follow an expert, be sure to research their qualifications, credentials and experience in the financial industry.
Look for experts who share high-quality educational content like well-researched articles, videos and posts that provide valuable insights rather than making sensational claims or promising you'll get rich quick. Also, beware of anyone who constantly tries to sell you on their products or services. You can also ask for recommendations from people you trust to help you find reliable experts.
Here are a few to check out:
- • Investing Latina is the YouTube channel for financial influencer Jully-Alma Taveras, who encourages followers to grow their wealth, improve their financial knowledge and spend intentionally in order to invest more.
- • Yo Quiero Dinero is an award-winning podcast hosted by Jannese Torres that connects you with the Hispanic community and touches on topics of financial literacy, investing, entrepreneurship and building generational wealth.
You've Got This!
Despite the hurdles faced by the Hispanic community, there are many tools and resources that can make credit education and financial literacy more accessible. You can start your journey today by striking up a conversation about money in your household, reading up on the basics of using a credit card or even applying for a credit card that can help you start building a good credit score. Remember: Creating financial security comes first from having awareness, and then taking action.
Cindy Lamothe is a freelance journalist based in Antigua, Guatemala. Her work has appeared in The New York Times, The Atlantic, BBC Future, Fast Company, Quartz, The Washington Post and many more. Find her at her website: www.cindylamothe.com.
READ MORE: The Ultimate Guide to Personal Finance
Sources/references
1. Kenneth J. White et al. “We Don't Talk About That": Exploring Money Conversations of Black, Hispanic, and White Households. Family & Consumer Sciences. April 25, 2021.
2. Insights from Hispanic Families—Executive Summary. Massachusetts Mutual Life Insurance Company. 2018.
3. Black and Hispanic Americans on the U.S. financial system: "The odds were always against me," new Credit Sesame survey finds. Credit Sesame. January 26, 2021.
4. Jens Manuel Krogstad, Jeffrey S. Passel and Luis Noe-Bustamante. Key Facts about U.S. Latinos for National Hispanic Heritage Month. Pew Research Center. September 23, 2022.
5. A Closer Look Into the Finances of Hispanic American Households. Morningstar. September 2021.
6. Jack Caporal. Study: Race and Personal Finance in America. The Ascent. Updated May 31, 2023.