Blacks and Latinos are denied access to credit and financial services at a much higher rate because of their credit scores, according to a recent study by the University of Denver Center for African American Policy.

The study, released by the National Black Caucus of State Legislators, found that accessibility to financial services is limited in low-credit-score communities, while higher income and higher-credit-score communities provide access to a mainstream of financial-service organizations.

Although the study revealed that a disproportionate number of Americans with low credit scores are blacks and Latinos, it also showed that there's a greater correlation between credit scores and the availability of financial services than there is with factors such as race and ethnicity.

Why Do Credit Scores Matter?

A high or prime credit score today is a determinant factor in several areas of daily life, including securing insurance, purchasing a home and opening a checking account or an account for basic home utilities such as electricity. The impact credit scores have on obtaining these amenities can restrict one's ability to acquire and obtain wealth. It can even impact job success.

Lisa Bailey, a 41-year-old black woman, can relate to this all too well. Bailey, with help from the Equal Employment Opportunity Commission, filed charges against Harvard University after the school withdrew a job-promotion offer they gave her due to her low credit scores.

The university has not commented on Bailey's case because of privacy considerations, but in a released statement, Joe Wrinn, a Harvard spokesperson, said "Credit-history reviews are conducted with the consent of an applicant, only for positions with access to sensitive financial information or involvement in significant financial transactions."

Credit checks are a growing factor in the hiring process now. According to the Society of Human Resource Management (SHRM), the percentage of employers conducting credit checks on potential employees increased from 19 percent to 35 percent over a seven-year span.

Bailey hopes her lawsuit will prevent employers from checking credit histories. "It would help a lot of people who are struggling financially," she said. "Not just me, but people all over the United States will be able to have jobs, and a credit history will not get in their way."

Going From Low to Prime Credit Scores

Consumers with low credit scores often find themselves in a bind because there's no certified method to improving credit scores. "It's a catch-22. To build a prime score, banks require consumers to demonstrate positive credit; but banks won't extend credit to these consumers without a prime credit score, leaving many trapped," said Colorado Senate President Pro Tem Peter Groff.

Following these two tips can improve your scores:

1. Pay bills on time

Paying bills on time, over a significant time period, will improve one's FICO score and in turn improve one's credit scores. FICO scores, measures of credit risk calculated from a standardized formula, are based on payment history and typically range from 350 to 850.

2. Keep credit-card balances low

Since FICO scores measure one's credit-utilization rate (the total amount you've charged as a percentage of the total of all your credit limits), it's best to make sure you don't near those limits. Credit-card debts should be paid down to below 35 percent of the limit.

Read more about improving your scores here.

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