Giving Credit Where Credit Is Due: What We Can Learn from the Banking and Credit Habits of Undocumented Immigrants

Abstract

Undocumented immigrants currently make up more than 5% of the U.S. labor force and 7% of school-age children. Numbering over eleven million, undocumented immigrants unquestionably comprise a significant segment of the population, yet most lack financial security and stability on multiple fronts. In addition to the everyday risk of deportation, many risk being taken advantage of on the basis of their immigration status, in both employment and debtor-creditor relationships. While some of these financial conditions are well-chronicled, this Article describes the first empirical study of the debtor-credit relationships of undocumented immigrants. Through live interviews, this Article recounts the general financial impediments undocumented immigrants face in trying to work, pay taxes, raise children, participate in the U.S. economy, and simply survive.

Among other topics, this Article explores whether undocumented immigrants use traditional financial institutions or more informal ones, and whether predatory lenders such as payday and title lenders have made inroads into immigrant communities. It further explores our study participants’ perception of and attitudes toward various forms of credit, with the hope of using this sample to gain more generalized insights into the credit uses and attitudes of undocumented Americans as a whole in today’s consumer credit economy.

Through our study, we were able to uncover a few of the grim realities of living in the financial shadows, with only precarious means of financial support, distanced from social safety networks at home, at legal disadvantage, and without a place at any policy-related table. Indeed, we conclude that the financial condition of many undocumented immigrants is far more precarious than one might imagine, as shown through our data that 74% of the persons interviewed would not be able to cover a $100 emergency if it came up. We also discovered fear of and disdain for credit among many undocumented persons, demonstrating sensible ideas about credit, which many of us in the mainstream population could learn from.

Keywords: undocumented immigrants, debtor-creditor relationships, predatory lenders, payday lenders, title lenders