Financial equality for women in the United States has come a long way, but there is still progress to be made. For example, women still earn less on average than men, which can make it harder to get good rates on loans. To understand how gender affects women’s borrowing, it is helpful to revisit some key milestones in the history of women, money and credit. Here is a timeline of women’s rights and loan products in the United States
1848: Married women can control their own property
Until 1848, a woman’s husband had control of any real estate or property she owned. Unmarried women were legally allowed to retain their property, but upon marriage, control of that property passed to the husband. Also, women could not acquire property when they were married.
These laws began to slowly change in 1848 when New York passed the Married Women’s Property Act, which allowed married women to own property. Most states had passed this law by 1900.
Impact on women using loan products
The right to own property was a significant step forward in a woman’s ability to build financial wealth and opened the door for married women to begin to gain financial independence. While women would eventually participate more in the financial world and the loan market, women’s financial progress remained relatively stagnant in the United States for decades, and women only gained equitable access to loan products. later.
The 1960s: women can open bank accounts
In the United States, women began to have legal access to banking products in the 1960s. However, many banking institutions would still not allow women to open a checking account, obtain a credit card, or apply for a loan or mortgage without a male co-signer.
Impact on women using loan products
Access to banking institutions has technically given women the right to access loan products, but discrimination by lenders has largely prevented women from participating in the market. This was, however, the beginning of women’s ability to build credit in their own name.
1963: The Equal Pay Act
The Equal Pay Act 1963 prohibits employers from paying men and women differently for comparable work. This law coincided with women beginning to have access to their own bank accounts for the first time.
Impact on women using loan products
The gender pay gap was and still is a significant barrier for women in building wealth and participating in the financial market. Although the Equal Pay Act improved employers’ payment practices, there are still gender wage differences today that affect women’s ability to use loan products, as well as the reason for which women tend to use loan products.
1972: The Equal Rights Amendment
The Equal Rights Amendment was approved by Congress in 1972 and would have formally recognized “equal rights before the law” for men and women at the federal level. An amendment must be ratified by 38 out of 50 states to become law, and it was only ratified by 35 states at the time. Virginia has become the 38th state to ratify this amendment. in January 2020, but the question of whether the amendment will be officially recognized is still in debate.
Impact on women using loan products
The Equal Rights Amendment would have formally recognized gender as a suspect classification like race, religion and national origin. This would have opened up many institutions and structures to greater scrutiny to ensure that there is no gender discrimination. This law has always been widely debated, and its future remains uncertain; since this amendment has not been enacted nationally, gender-based inequality in the financial world and in the lending market remains.
1974: The Equal Credit Opportunity Act
The Equal Credit Opportunity Act of 1974 was a turning point for American women and their financial futures. Prior to the ECOA, women generally could not take out loans without a male co-signer, and lenders often charged female borrowers higher interest rates and larger down payment requirements. This law prohibited lenders from requiring male co-signers or treating women differently in any way during the loan process.
Impact on women using loan products
ECOA has helped to open up the loan market to women and give them a better chance of being on an equal footing with men. In the years since the passage of the ECOA, women in the United States have come a long way when it comes to credit. Now, data from Experian shows that women’s and men’s average credit scores are almost identical and that they carry comparable amounts of debt in the form of personal loans, student loans, car loans and home equity lines of credit.
2007: The Great Recession
Women were among the first to lose their jobs during the financial recession from 2007 to 2009, and they were disproportionately impacted by the ensuing mortgage crisis due to being more likely targets for subprime loans. The women are more likely being targeted by predatory lenders, especially low-income women and women of color. These lenders tend to prey on people in times of economic downturn, such as recession.
Impact on women using loan products
The Great Recession and subsequent mortgage crisis left many Americans strapped for cash and drowning in debt. For American women, who were already behind financially and tended to be the first to lose their jobs, this crisis increased the risk of predatory lending and debt.
Today: The future of women and loans
Today, the way men and women use loans differs significantly. American University Research found that women are generally more likely to use loan funds for emergency and practical expenses, while men are more likely to use these funds for luxury expenses. This could explain why, on average, men have 20 percent more personal debt than women.
Student loan debt is the one area where women borrow more than men. According to American Association of University Women 2021 Deeper in Debt Report, female college graduates with higher levels of student debt are more likely to take out student loans and take longer to pay off their balances. After college, women are less likely to choose higher-paying fields of study, such as STEM, and they earn less than their male peers in comparable positions – all factors that make it more difficult to pay off student debt.
There are several things that can be done to further promote gender equity in lending. For a, Studies show that there is a direct correlation between labor market participation and financial inclusion – meaning that the more women participate in the labor market, the more they can participate in the financial world. Opening doors to women in leadership and leadership positions will also help reduce income disparities in the United States and make it easier for women to access affordable credit.
Taking control of your finances as a woman can sometimes seem like an uphill battle, but there are things you can do to defend yourself and resources to guide you. Platforms like Ellevest and smart girl finance providing women with access to courses, coaching and learning resources to help women excel in the financial world.
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