Enhancing Credit Access for Low- and Moderate-Income Communities

While many people interact with the financial system by using bank accounts and borrowing money, others encounter barriers to accessing reliable and affordable financial products and services.

Research shows that lower-income people struggle the most with financial access. For example, a recent report from the Federal Reserve Bank of St. Louis found that, of the adults living in the Eighth Federal Reserve District, those in low- and moderate-income communities had the least access to consumer credit because they had no credit score or a low credit score.

The Economic Well-Being of U.S. Households in 2024 (PDF) report found that adults with lower incomes are less likely to have bank accounts and more likely to use small loans from nonbanks, such as payday loans, which often have a higher borrowing cost.

On Oct. 22-23, the inaugural Crossing the Credit Barrier conference brought researchers, bankers, community leaders, and others from across the nation together to connect and to discuss the state of banking and credit for low- and moderate-income communities. More than 450 people participated in the hybrid conference, which was held at the St. Louis Fed and co-sponsored by the Federal Reserve banks of Boston, Philadelphia and Richmond.

The conference supports the St. Louis Fed’s commitment to a strong and resilient economy for all.

“Hosting discussions like this one allows us to connect thought leaders and address key issues,” St. Louis Fed President Alberto Musalem said in his welcoming remarks. The issues discussed at the conference “help all of us working on monetary policy meet the needs of the people we serve,” he said.

The conference is also part of our Community Development team’s ongoing work to advance financial well-being by understanding access to credit in low- and moderate-income communities.

This blog post and the video below recap some highlights of the two-day conference.

Plenary Speakers

The opening fireside chat featured Maxine Clark, founder of Build-A-Bear Workshop and chief inspirator of Delmar DivINe, a mixed-use development that supports St. Louis nonprofits. Dara Eskridge, CEO of Invest STL, a nonprofit that invests in development of St. Louis’ Black communities, moderated the conversation. Clark and Eskridge discussed the St. Louis region's history of investment and innovative, place-based approaches to economic development through consumer credit access. Clark also shared her experience accessing credit as a small-business owner and the meaningful impact loans had on her business and perspective.

Brandee McHale, head of Community Investing and Development at Citi and president of the Citi Foundation, was the speaker for the closing plenary. Moderated by St. Louis Community Credit Union Vice President Paul Woodruff, the conversation explored innovative philanthropic and creative capital approaches that can transform low- and moderate-income communities’ economic outcomes.

“It’s an inflection moment,” McHale said. She also said it's an opportunity for those working in community development to “build bridges and find common ground with others who are committed to prosperity for all Americans.”

Sessions

Panel discussions brought together 52 researchers and practitioners on a range of topics:

• The complex landscape of alternative financial services platforms and the effect of these services on financial access.
• Credit underwriting models that expand access to consumer credit and the use of artificial intelligence (AI) and other technology to develop financing.
• The role credit plays, the challenges it presents and the impacts it has on ownership of homes and cars.
• Innovative credit access solutions for small businesses and consumers through employer-sponsored products.
• The changing nature of financial education and the importance of financial literacy for financial well-being.

A highlight of the agenda was the “Data Bar,” where attendees learned about some of the Federal Reserve banks’ interactive data tools that support community development.

Popular Topics and Ideas

Throughout the conference, topics most frequently discussed by speakers included:

• Consumer credit debt and delinquency increased in recent years. Many speakers expect the trend will continue in the short term.
• Consumer trust in financial institutions is vital to implementing approaches that strengthen financial well-being.
• Some low- and moderate-income consumers have low wages and little or no discretionary income. In addition to high-quality financial education, they need access to resources and investment to improve financial well-being.

In a poll, attendees shared ideas from the conference that might inform their approach to addressing credit barriers in low- and moderate-income communities. The most discussed idea was fostering partnerships and collaboration to advance credit access at the community level. Several attendees said that they wanted to find opportunities to work with peer organizations to leverage resources and more effectively meet the needs of consumers. Attendees also said that they wanted to prioritize hearing from and telling the stories of the community members that their organizations serve.

Conclusion

The conference exemplified the critical role that credit plays in how consumers and small business owners experience the economy. As speaker Signe-Mary McKernan, an Urban Institute vice president, said, “Access to credit and capital is crucial for financial well-being, so that every American can thrive and prosper.”

She and many other speakers said credit is essential for consumers and small businesses so they can invest in their futures, weather financial emergencies, and more fully participate in the economy.