The app focuses on racial disparities in wealth by increasing credit scores and homeownership

The homeownership rate for blacks is currently around 44% compared to around 74% for whites, according to data from the US Census Bureau. But this gap is not only huge. It is also a major contributor to racial economic disparities since, for most Americans in general, the majority of their wealth comes from their homes.

That’s why Castleigh Johnson launched a fintech start-up My original journey Last year. The goal: to help improve credit scores, so black households can get a mortgage, while also gaining the financial literacy necessary to thrive after buying and moving into that home.

“We are here to crush the home ownership divide in a sustainable way,” he says.

Move like a speedboat

It was during his tenure as a banking examiner at the Federal Reserve Bank of New York during the financial crisis that Johnson began to believe he needed to do more to address racial wealth disparities in the United States. Studying the data, Johnson, who has also held leadership positions with Goldman Sachs, AIG and other companies saw how alarmingly disproportionately the impact of the crisis was on people of color.

But in order to effect real change and do it faster than the pace of a snail, it was necessary to break out of traditional institutions. “With a small business, you can move like a speedboat,” he says.

Four years ago, Johnson founded a company called Trifigo that focused on improving credit scores and financial decision making more generally. But a few years later, he encountered a startling information: in 1968, when Congress passed the Fair Housing Act of 1968 banning the practice of redlining, the homeownership rate among blacks was 43%. In 2019? It was about the same, if not lower. With this information and other research, Johnson decided to reorient his mission towards the issue of homeownership. In March 2020, he changed the name of the company to reflect its backbone.

Recruitment of financial institutions

Specifically, the company’s platform aims to help traditionally high-risk consumers master their financial literacy and rebuild their credit profile. But the key is to involve financial institutions in this effort by targeting their portfolios. “There must be recurring business incentives,” he says. “We have a blueprint, but we need to partner with the people who are really going to move the needle.”

To this end, the company is working with banks to improve borrower scores, which are around 50 points from the minimum required to get a mortgage. “These are people on hand,” Johnson says. “We want to target people who have the opportunity to get there within a reasonable time frame.” This means consumers who, with six or seven months of work, have a good chance of reaching the finish line. Additionally, financial partners only pay the business when users transition from high-risk borrower status to qualified borrower status.

Stay engaged

To make sure consumers stay on track for as long as needed, Johnson has developed a system to keep them engaged. For example, after providing banking information and other data for analysis, users get an initial assessment of their financial situation. Instead of just providing a total score, which might not mean much to some people, the platform gives them a rating. (Think, you are a C minus and you have to come up with a B).

Then, he suggests steps to be taken to improve that grade. Since most scores come largely from payment history and credit card usage, according to Johnson, current recommendations are aimed at reducing high credit card balances. This usually involves a repayment plan based on an analysis of the consumer’s cash flow and spending and how to free up cash that can be used to pay off debt.

In April, the company launched its first beta with around 1,000 users, working with First Republic Bank’s Eagle community home loan program in northern California. He was also accepted into the First Cohort of the EY Entrepreneur Access Network for Black and Latinx and Black + Entrepreneurs, a program of the VICE Media Group and the National Urban League, which offers black-owned businesses campaigns. media, marketing services and pro bono mentoring. .

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