Build Credit. Build Assets.
© 2008 Credit Builders Alliance, Inc. Some rights reserved. CREDIT BUILDERS ALLIANCE and the accompanying Logo are trademarks of Credit Builders Alliance, Inc. This document is licensed under a Creative Commons Attribution-Noncommercial-Share Alike License (US/v.3.0).
Credo: CRED o (kreed’ o) v.
trust
Credit : CRED it (kred’ it) n.
value; worth
CBA Mission
To create innovative solutions for asset
building organizations to help low and
moderate income families build stronger
credit and financial access in order to
grow their businesses and/or personal
assets.
CBA Board
CBA has a diverse active board representing:
–
ACCION International
–
Center for Financial Services Innovation - ShoreBank
–
Central Vermont Community Action Council/Community
Capital of Vermont
–
Church of the Brethren Credit Union
–
Ethiopian Community Development Corporation EDG
–
Justine Petersen Housing
–
New Mexico Assets Consortium
–
Opportunity Finance Network
–
RUPRI Center for Rural Entrepreneurship
–
CBA’s Work
CBA is implementing its mission through three main activities:
Innovative Products and Services
CBA Reporter
community lenders report borrower data through our
unique partnerships with major credit bureaus.
CBA Access
negotiating low cost credit reports for lending, credit
education, and measuring outcome
Knowledge Sharing, Training and Consulting
CBA Toolkit
online resource sharing tools, strategies and best practices
CB 5-Step Training and Workshops
as webinars and on-site trainings
Credit Outcome and Credit Builder Loan Development consulting
Research and Awareness Raising
Longitudinal Research
with Justine Petersen & St. Louis University
Credit Outcome Tracking
how credit reports could provide a
cost-effective objective longitudinal
measure of economic self-sufficiency
Goals
By the end of this workshop, we hope you will:
Better understand today’s credit economy
Value credit as a financial asset
Have new strategies to build credit
Connect credit building to your diverse work
Asset-Based Approach to read a Credit Report
Access to credit reports and scores
Ideas for an Opportunity Loan for your target market
Options to measure outcomes with credit reports
Part 1
“Enabling CBA’s clients to report data to us expands the
credit system to many individuals who have not had the
benefits of an established credit history in the past. We
applaud CBA for their pioneering work, and we are
looking forward to seeing the results of our joint efforts.”
Zaydoon H. Munir, Sr Vice President, Experian
Credit Quiz
Which of the following is calculated in a credit
score?
a. Character
b. Capacity
c. Capital
d. Collateral
Credit Reporting –
the beginning
Small Business. Small Bureaus.
•
Small retail merchants traded financial info
about customers to minimize risk
•
Merchant associations turned into small credit
bureaus
Credit Industry
Today
Big Business. Big Credit Bureaus.
Uniform electronic data furnisher process
(Metro2 and e-Oscar)
Elimination of intermediaries
Expanded use of credit scoring & Automated
Underwriting Systems (AUS) for businesses
nationwide
Credit Industry
Today
Fair Credit Reporting Act
Consumer Rights created circa:
1971 View, dispute and correct records
1996 Verified response within 30 days from credit bureaus
2003 Fair and Accurate Credit Transaction Act added
2004
Free Credit Reports and “Fairly priced” scores
2010 Direct dispute with data provider
Credit Reporting
Today
Fair Credit Reporting Act
–
Credit bureaus responsible for integrity and accuracy of
data in databases
–
Consumers have right to see & dispute information and
receive verified response within 30 days
–
Data providers need to report fully and consistently and
verify data upon dispute
Credit Industry
Today
VOLUNTARY
for-profit
system
Increased costs of reporting
Data in/Data out Issues
Underrepresented Low-Income
And Minority Communities
Collection Agencies
to the rescue!
Catch-22
Good Credit scores provide access for most
business transactions
BUT
Individuals, entrepreneurs and communities
with low or poor traditional credit have
Financial System:
Cut Two Ways
40% of US population have no score or a low credit score
•
15 percent of the U.S. population - between 35-50 million people –
have no credit files or thin files and are “unscoreable.”
•
25 percent of the population have poor scores (lower than 650
FICO)
Low credit scores = “underbanked”
40% of US population are using alternative financial services
my car broke down….
and I had the most
peculiar safety net.
Two-Tiered
Financial System
Credit Card(PIF)
Credit Card (balance)
PayDay Loan
0% loan 30 days
22% APR
credit
Financial information
NOT
in traditional credit report
Utility Data
AFS
Rent Bureaus
Telecomm
Payday Loans
Online Shopping
•
Fannie/Freddie required mortgage underwriters to accept Rent
plus 2 lines of “alternative credit” when no credit exists
•
Companies like
Microbilt (formerly PRBC)
collect alternative data,
create reports and sell alternative scores
Part 3
Nonprofits and Financial Capability
in Today’s Changing Credit Economy
CBA Theory of
Change
Financial Education with
“Just-in-Time Product”
leads to
Measurable Outcomes
Financial Capability
Credit Builder
5-Step
©
Step 1 : Rethink: Credit as an Asset
Impart importance of good credit
Step 2 : Know the Score
Pull a credit report – Financial Resume – at every client intake
Step 3 : Get Good Stuff Going
Build good credit first before dwelling on bad debt.
Step 4: Create a Credit Action Plan
Integrate credit into income, saving, asset and budget goal planning
Step 5: Delve Deep out of Debt
Credit Building
Strategies
Step 1 : Rethink: Credit as an Asset
“many people are creditworthy, but not credit educated”
Impart importance of good credit
Help your client “own” their credit report
CBA Theory of
Change
“Credit is a Financial Asset”
Good credit rating will save approximately $250,000 in
interest throughout our working lives
A car buyer can save $50/month on a 36-month car loan.
A renter has access to apartment in community with good schools
Consumer has security and utility company deposits.
Good Credit = Asset
Yes!
helps families build wealth – a home, a business, education.
Yes!
offers access to safe, affordable financial services
Yes!
impacts opportunities with growing number of businesses:
• landlords/rental housing
• insurers
• auto lenders
• employers
• banks -- checking, savings, and investment accounts
• utilities and phones
Why Credit?
Credit as a Business Asset
Credit impacts entrepreneur access to:
• rental space/real estate
• auto purchases and car insurance
• hiring employees
• checking, savings, and investment accounts
• utilities and phones
Credit building is
Asset Building
“Credit building may be the most cost-effective and
efficient asset building tool.”
Robert Boyle, Justine Petersen Housing, St. Louis
JP’s Premise
•
The single most important factor in developing and increasing
long term assets is attaining and maintaining a high credit score.
•
As advocates and practitioners we have a responsibility:
–
to recognize how important good credit is in our financial
culture, and by contrast how debilitating bad credit is
–
to convey information to our client/customer about how to
CBA Theory of
Change
Credit Report
What is Credit
Building?
X
Credit Repair -
help individuals remove information on the credit report they
know to be true
?
Credit Counseling
-
created to offer “debt management plans” as bankruptcy
alternative
!
Credit Education
- general educational information around credit through
websites, workshops, etc.
!
Credit Coaching –
goal-oriented relationship to offer strategies to change
behavior so clients build and maintain credit and assets
!
Credit Building -
asset building products and services to help people create or
improve their credit
What is Credit
Building?
X
Credit Repair
=
fixing history
?
Credit Counseling
=
dealing with crisis
Credit Building
Strategies
Step 2 : Know the Score
Know the credit profile of your client base
Pull a credit report at every client intake
What is driving the score? Is it what’s on the report
---
or what’s NOT on the report.
Credit Builder Tools:
Community Credit Profile Survey
Consumer Access to Credit Reports
Nonprofit Access to Credit Reports
What’s in your score
•
35%
-- payment histories on your credit accounts, with
recent history weighted a bit more heavily than the
distant past.
•
30%
-- amount of debt you have outstanding with all
creditors.
•
15%
--
how long you’ve been a credit user (a longer
history is better if you made timely payments).
•
10%
-- very recent history, based on your efforts to
obtain loans or credit lines in the past few months.
•
10%
-- mix of credit you hold, including installment
What’s in your score
Scoring is impacted by Changes in:
Product
Consumer behavior
Credit bureau competition
Underwriting and Bank Behavior
VantageScore
What is the new
VantageScore?
•
Created jointly by the three
major credit bureaus
•
Range is 500 to1000
(FICO scores ranges from 350 to 850)
•
Same model for all three
bureaus -- only score
difference will be different
data across bureaus
•
Scores for thin file and
bankruptcy populations
Source: www.vantagescore.com
Payment
history
32%
Utilization
23%
Balances
15%
Depth
of credit
13%
Recent
credit
10%
Available
credit
7%
Accessing Credit
Reports and Scores
Consumer Access to Reports
• Credit Education Reports (B2C)
• Always a soft inquiry report (no impact on score)
• 100% match (no other “John Smith” gets his data)
• No SSN, no online report - EIN not accepted
• Original Creditor Info to connect collections
• List of Soft Inquiries
• Lists Date of First Delinquency
Accessing Credit
Reports and Scores
Consumer Access to Reports
www.annualcreditreport.com
Free consumer report from each of the three bureaus (Federal)
• Scores cost money
• Different scores available
VantageScore from TU & Experian
FICO from Equifax
www.myfico.com
May purchase credit reports with FICO scores for TU & Equifax
Accessing Credit
Reports and Scores
Non-profit Access (B2B)
Lenders can pull Hard Inquiry reports for underwriting
HUD Housing and Credit Counseling certified can pull soft inquiry
CBA
new
partnership with TransUnion!
ALL NONPROFITS can pull SOFT INQUIRY for Financial Education,
Training and Outcome Tracking
Low set-up fees from $100-$375
No monthly fees or minimums
Credit Building
Strategies
Step 3 : Get the Good Stuff Going
Build NEW good credit first before dwelling
on old bad credit. New on-time payments
improve your credit quicker.
Partner with a financial institution to open a
Secured Credit Card
Create a Credit Builder Loan. Report it
through CBA.
JP Credit Builder Loan
Loan Amount: $150.00
Interest Rate: Flat $30.00
Term: 12 months
Monthly Payment: $15.00
Success:
•
Ms. Jones filed Chapter 7 Bankruptcy in January 2006. In September 2006,
her credit report accurately reported zero balances on all accounts and no
credit score. She opened a Credit Builder Loan and made six on-time
payments. In February 2007, her credit score is 637.
•
Ms. Clemons had $4,500 in unpaid collections and a $1,500 civil judgment.
In July 2006, she had no good lines of credit. Her credit score was 457. In
September 2006, she opened a Credit Builder Loan and a US Bank secured
credit card. She made six on-time payments to each. In February 2007, she
still had $6,000 in unpaid collections and civil judgment and her credit score
Mr. M
December
2006
Mr. M wants to
buy a home. He
comes to Justine
Petersen. JP pulls
credit report.
Initial credit
score = 513.
Advised to open
new lines of
credit.
+2 months
August
2007
Credit score
was 619
--credit score
jumped 106
points!
Sent dispute
letters to credit
bureaus.
Started
business plan
to open
February
2007
Mr. M opens JP
Credit Builder
Loan and
secured credit
card from U.S.
Bank.
+ 6 months
December
2007
Credit score
now = 635.
Inaccurate
information
removed from
report per
dispute letters.
+ 4 months
Mr. M
cont’d
May
2009
Mr. M is serious
about buying a house
Credit score = 652
12 bounced checks
reporting on credit
report. These are not
his, client has never
bounced a check.
October
2009
Client comes in and
we pull credit.
Credit score = 663
Bounced checks are
taken off of credit
report.
December
2009
Mr. M’s wife has
twins. Family has
decided to put off
homeownership till
things settle down.
Part 4
Opportunity Loan
1) Offer access to appropriate starter product
2) Create new behavior of on-time payments
3) Create credit history
4) Create pathway to long-term relationship
with at least 2 creditors that report
5) Establish long-term behavior that builds
credit not debt
Opportunity Loan
Opportunity loans can:
a) Build savings
b) Support Cash Management/Budgeting
c) Offer Alternative to Predatory Products
d) Reduce Debt
e) Reduce Expenses
f) Build Assets
Opportunity Loan
Delivery and terms to reduce risk
a) 100% Cash Secured
b) Partially Cash Secured
c) Collateralized
d) Payroll Deduction
e) ACH
Innovations in
Opportunity Loans
Product:
Amount
Lender
CB Loan/CC
$200
Justine Petersen
CB Saver
$500
LISC, Peoples CU
CB Micro
$500
NYANA
Peer Saving
$1,000
Mission Asset Fund
Payday Alternative
$1,000
CPCDC, Innovative
Appliance Loans
$1,500
Chautauqua
Micro Consolidation
$2,500
Four Bands
Debt Consolidation
$5,000
Isles
Opportunity Loan
$100-$1,000
•
Installment loan
•
5% origination fee
•
18% interest
•
15% held as security
Credit Builder Loan
$150 installment loan
• $25 application fee
• 12 month term
•
$12.50 monthly payment
•
Hold entire principal as security
until paid off
Step Up Loan
Loan Amount:
up to $500.00
Interest Rate:
12%
Loan Term:
6 months
Success
BCNA (formerly NYANA) offers $500 loans to
clients who have no score. After 6 months, they
can see scores go up to 660, enabling them to
make a larger business capitalization loan
Cestas Populares
Taking a traditional lending practice up a notch to create greater and long-lasting impact
Average Loan Amount:
$200-$1200
Average Loan Payment:
$200
Term:
Minimum 1 year
Interest Rate:
0%
Target Market:
Immigrant populations with an informal peer lending circle
Requirements:
1) Have or open a bank account
2) Commit to participating in a Cesta for at least one year
3) Credit report and score review at intake
4) Monthly education including credit education
After four months, the average credit score increased 52 points.
Participants decreased their debt balance (installment and revolving) by an average $1208.
Mission Asset Fund
Washington Access Fund
Assistive Technology Loan
Loan Amount:
up to $10,000
Interest Rate:
5%
Term:
up to 5 years
Use:
hearing aids, vehicle adaptations, computers software and hardware,
vision aids and mobility equipment – all items typically not covered by
insurance or other programs.
Target:
Washington residents of all ages with disabilities of all types
Outcomes:
2007 Borrower Survey: 43% improved ability to manage their finances, 43%
increased their net worth, 32% higher household income.
Since joining CBA, we have definitely seen improvements in credit scores
-particularly those people with no credit histories.
Fresh Start Loan
Fresh Start Loan is designed to help build credit and save money.
Loan Amount:
$300-$3,000
Interest Rate:
6%
Term:
up to 24 months
Savings:
regular savings account or CD
Target Market:
the unbanked/underbanked in Oakland, CA
Loan Type:
Secured.
PEOPLE'S FCU holds the loan funds until
after the loan has been repaid in full and then releases the full
amount of the loan plus all dividends to the borrower.
People’s Community Partnership
Federal Credit Union
in partnership with Shorebank
Enhanced IDA Credit Builder Account
Loan Amount
: $250-$1,000
Loan Type
: Secured
Interest Rate
: 2.5% above interest rate on savings account
Term
: 6 or 12 months
Target Market
: low-income Center for Working Family clients
Process:
Bank
makes loan
to customer
Bank
deposits full amount
of loan
into new “locked” savings account
Customer
begins to pay back
the loan
Payments reported
to credit bureaus
On-time payments
can
push credit score up
Chautauqua Opportunities
Appliance Loan
Loan Amount:
$500 - $1,400
Loan Type: Secured
Interest Rate:
Prime +3 (around 8%)
Term:
1-3 years
Target:
very low-income clients
Success Story:
Annie, a single mother, works 3 jobs to provide for her children. She
had no stove or fridge. She was cooking on a hot plate and storing
food in a cooler. Her children were at risk of removal from the home
by the state protective services agency. With an appliance loan from
CODI, she has been able to get a refrigerator and a stove in her
ECDC
Car Loan
Loan Amount:
up to $8,000
Interest Rate:
risk-based up to 15%
Term:
up to 3 years
Target:
people working multiple jobs and/or going to school; LMI and
refugees moving further away from the city and public transportation
Criteria:
demonstrated need to get to work, get a job or get to school
Success Story
EDG has provided their community:
– $10.2 million in business loans to 580 entrepreneurs
– $1 million in car loans to 183 income earners
– $2.5 million in match to 908 IDA savers
– $730k in EITC refunds to 605 families
CPCDC
Employee Loan Program
Loan Amount
: $500-$1,500
Loan Type
: Unsecured
Interest Rate
: 16%
Term
: 12-18 months
Target Market
: Tribal employees
Success story
Ms. Anderson received an employee loan in April 2006. She had no credit
score and a credit report with only old collections. In August 2007 she had
Credit Builder Loan
Client Profile:
More than 50% of 1,000 clients has no credit profile
Other 50% have credit score average of 600.
Most low score from default/bad tradelines only.
Lots of Payday loan debt led to debt consolidation loan
Product Loan Amount:
up to $2,500
Term: 24 months
Interest Rate: 10.25% -12.25%
Process:
1) Credit report review
2) Confirm outstanding debt
3) Complete Credit when Credit is Due course
4) Receive loan up t $2,500 to pay off debt
5) Build credit history and access business loans
Create your
Opportunity Loan!
Mission Connect
Target Market
Purpose
Loan Product
Loan Size
Interest Rate
Risk-Management Terms
New Developments
Ramp it Up!
Springboard Loan
Moving on Up Loan
Isles Community
Enterprises
Springboard Loan
Loan Amount
: $500-$5,000
Target Market:
low-income individuals with high cost credit
Purpose
: repay personal debt and build positive credit
record for future asset acquisition
Interest Rate
: 8%
Term
: 12-36 months
Isles Community
Enterprises
May
2007
Kisha is
serious about
buying a house
Credit score =
597
July
2007
Tracked
expenses for
30 days and
developed a
spending plan
July
2009
Credit
Score
= 719
September
2007
Completed
Financial
Fitness and
approved for
$5,000 loan
to pay for
defaulted
debt
August
2008
Credit report
pulled to
verify that
defaulted
debt
correctly
reporting as
paid
August
2009
Pre-Approved
for
mortgage!
November
2009
Closed on
home!
Isles Community
Enterprises
Kisha is a young African American woman who works full-time for the State
of New Jersey. At intake she was making $27,246 per year, which is just
under 50% of the AMI for Mercer County, NJ. She has attended some
college, but does not have a degree. She now has two children.
Kisha was extremely focused with an anything is possible attitude. She
worked with us for almost 2 ½ years and was never late for an appointment.
This client is so special is because of the credit challenges she overcame
and her commitment to maintain a high credit score. She managed to get
approved for a mortgage during the credit crunch and at a time when
Isles Community
Enterprises
“When I initially evaluated my debt and credit, I
knew I would need help if I wanted to buy a
house. A friend told me about the Isles program.
The counselors were great and really cared
about what I was doing. They wanted to see
results and I gave them results. When my credit
score went over 700 I knew I had really
Credit Building
Strategies
Step 4: Create a Credit Action Plan
Appropriate Opportunity Loans
Strategies to reduce active debt and collections
Save!
EITC refunds
Review the credit report once a year
Credit Builder Tools:
Financial Capability Action Plan
Practitioner Tip Sheets – EITC, Workforce Development
Tips for managing a credit card
Ms. Young
October
2006
Ms. Young comes
to CPCDC with
nearly $19,000 in
debt. She enrolls
in the credit
builder IDA
program.
Initial credit
score = 476.
+ 4 months
April
2007
Uses EITC refund
to pay off $2,500 in
collections and
payday loan debt.
January
2007
Takes out
$500
employee
loan and
starts making
on-time
reported
payments.
+ 4 months
September
2007
Completes IDA
program: saved
$786 ($2,359 with
match). Uses IDA
savings to pay
back debt.
Completed 42
hours of
financial
education.
+ 6 months
December
2007
Credit score
is 603.
+ 4 months
Credit Building
Strategies
Step 5: Delve Deeper out of Debt
Dispute credit report inaccuracies
Negotiate old debt – make lump sum payments
Consolidate debt into lower cost loan
Credit Builder Tools:
Negotiating with Collections Agencies
Hot Topics: Medical Debt and Credit
STRICTLY CONFIDENTIAL The information contained in this document is confidential and proprietary to Credit Builders Alliance, Inc. (“the Company”).
Foreclosure
Foreclosure is one-time default
Being homeless is bad enough
Collections
•
Collections have most significant negative impact on a score when first
reported. Then they age.
•
Removing a collection account (i.e. medical collection) will improve the
score! If it’s not theirs – dispute it!
•
Paying off a collection account leaves negative info on report
•
Paying off a collection account can have a NEGATIVE impact if it makes
Date of Last Activity more recent (depends on score and data provider)
•
Collections age off from Date of First Delinquency with Original Creditor.
(Unless a partial payment was made at a later date, this is often the same
as the Date of Last Activity.)
•
Per credit bureaus, when a Collection Agent reports the outstanding
collection monthly, this should NOT update the Date of Last Activity nor
the Date of First Delinquency!
Collections
Strategies to Reduce Debt & Collection
•
Prioritize accounts with original creditor that can be brought
to good standing (i.e. past due on open credit card)
•
Prioritize larger accounts (i.e. over $1,000) more likely to go
to judgment and garnish wages
•
Prioritize more recent accounts (based on date of first
delinquency NOT last activity)
•
Dispute accounts with date first delinquency greater than 7
years or reporting post-bankruptcy
•
Save money to pay each account off in lump sum
Part 5
“Celebrate Success
”
Credit Outcome Tracking
Credit Outcome
Credit Reports = powerful financial tracking data!
Why?
•
Behavior Change Data
•
Universally Recognized
•
Third Party
•
Longitudinal
•
Cost-effective
Credit Outcome
Behavior Change Data
Credit reports shows actual financial behavior
-- not just interest or knowledge
FDIC Cites Dearth of Data! -- Evidence of the link between financial
knowledge and behavior change remains inadequate.
NEFE Impact Hierarchy –
• Financial education that changes participants’ behavior are more likely to
contribute to sustained, long-term results
NEFE Impact
Hierarchy
Indicators from
Credit Report
Participant Behavior Change Indicators
Financial Institution Relationships
Payment Behavior
Use of Debt
Total Debt
Debt to Credit Ratio
Use of Credit Cards
Indicators from
Credit Report
Results of Change
Improved Socio-Economic Condition
Credit Outcome
Universally Recognized
Credit report data exists separate from nonprofit
relationship with client
Credit reports and scores are utilized by many types of
businesses
Credit Outcome
Third Party Data
Unlike all other longitudinal financial education data, credit
report data is NOT self-reported
Credit Outcome
Longitudinal
Nonprofits with consumer written consent access credit
reports at intervals – 6 months, 12 months, 3 years
Credit Reports as Data Tool:
• track outcomes
• re-engage clients
Credit Outcome
Cost-effective
Nonprofits can pull soft inquiry credit reports with scores for
about $5 each
Compare this to the costs of conducting a client survey:
•
Expensive to create surveys and hire consultants
•
Time consuming to find and interview clients
• Selection bias due to participants’ availability and willingness
Credit Outcome
Measurement Tool
Credit reports could provide a cost-effective objective
longitudinal
measure of financial behavior and behavior
change to look at client and community outcomes.
Credit reports and scores are recognized and understood
by many types of businesses = don’t need to explain as
indicator.
Using Credit Data
Developing a Logic Framework
• What specific outcomes are of interest to your
organization?
• Why will your activities lead to these outcomes?
• Who will make use of the outcome data – staff,
management, funders, etc?
• When will you collect the data?
• How will client level stories (qualitative) and/or
group level (quantitative) outcomes be useful?
Using Credit Data
Quality and Access Issues
• Almost every credit reports has inaccurate data/mistakes
• How does one access private sector “proprietary” data?
• What format is credit data available?
• What permissions/purposes are needed to access data?
• How will confidential data be stored? Can it be shared
Presenting
Outcomes
1. Show Financial Behavior Change and Credit Score Change
2. Identify specific advice/activities that impacted behavior and credit
score – i.e. new financial institution credit line, on-time payments,
reduced debt to credit limit
3. Convey how activities helped client access assets
i.e. purchased car/home, increase savings, decreased debt
4. Tell a good story!
Microloan
Loan Amount
: $500-$35,000
Target Market
: minority-owned, women-owned and child
care center entrepreneurs
Robyn
Single mom, two kids
March
2005
FICO = 551
Robyn applied for
a bank loan to
expand her retail
pickle business
and was declined
due to lack of
collateral and two
charge-offs
+ 1 month
March
2007
FICO = 573
Charge-offs
removed
April
2005
UCEDC
approved
$20,000 loan
Assisted her
send letters
to 3 bureaus
to remove
charge-offs
that incorrect
+ 2 years
March
2008
UCEDC
begins
reporting loan
through CBA
+ 6 months
May
2009
FICO = 651
UCEDC
approves new
$20k loan
Pickle Licious
hires staff
Robyn gets
lower interest
car loan
+ 4 months
Helps Working Families Improve Credit Scores
and Build Economic Stability
2009 Credit Score Impact Study
•
Borrowers who received a
Ways to Work
loan and did not default on it had higher
credit scores following their participation in the program. For many borrowers,
increases continued even well after their loan repayment period ended.
•
Improved credit scores made a measurable, positive impact on a borrower’s ability to
engage in mainstream financial activities
•
Combined with a 2006 program evaluation, the two studies show that borrowers
increased their participation in mainstream financial markets following their receipt of
a
Ways to Work
loan. They opened more bank accounts, received more credit cards,
and obtained more conventional loans.
Workshop Participants: 567
Counseling Enrollments: 571
Cyber Café Members: 598
Counseling Graduates: 639
Loan Clients: 657
The Hope Banking Center Network method of data collection consisted of:
• Data collected from initial intake form at financial literacy workshops
• Data collected during program enrolment and consultation
• Data collected at counseling program graduation
• Data collected at loan origination and end of loan transaction
Data collected is entered into the database and client filing system which are updated
on a weekly basis. Quarterly quality control audits are conducted of database and
files to ensure that client information is accurate.
Be part of CBA!
Three ways to be part of CBA:
CBA Reporter.
Community lenders can provide borrower data through our
unique partnerships with major credit bureaus.
CBA Access.
Nonprofits organizations can pull credit reports for lending, credit
education, and measuring outcome.
CBA Member.
CBA Toolkit
is an online resource to collect and share tools and best
practices for asset-based credit building strategies.
Webinars and Workshops
as webinars and on-site trainings.
Consulting
product development, outcome tracking
Credit Impact Measure Research
credit reports as cost-effective,
objective, longitudinal
measure of economic self-sufficiency.
Just in Time Education:
Offer small loans
CBA Reporter
Whether you have 5 loans or 500,
CBA is a one-stop shop for reporting!
“Enabling CBA’s clients to report data to us expands the
credit system to many individuals who have not had the
benefits of an established credit history in the past. We
applaud CBA for their pioneering work, and we are
looking forward to seeing the results of our joint efforts.”
Vikki Frank
Executive Director
202-730-9390
www.creditbuildersalliance.org
Helping Clients Build Credit
Federal Reserve Bank of Boston:
