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  • Cost-benefit slide,

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  • 1. Exploring Innovation in Community Development Closing the wealth divide… New Ways to Help Underserved Communities Build Credit and Assets April 17, 2008
  • 2. Session Highlights
    • Credit in today’s economy
    • Innovative Approaches in Building Credit
      • Asset-based Credit building strategies
      • CBA Reporter: Report borrower repayment to build traditional credit
  • 3. Mission
    • To create innovative solutions to help non-traditional financial and asset building institutions serving low and moderate income individuals build client credit and financial access in order to grow their businesses and/or personal assets.
  • 4. Our Board
    • CBA has a diverse active board with more than 50% practitioner representation:
      • ACCION USA
      • Association for Enterprise Opportunity (AEO)
      • Center for Financial Services Innovation
      • Central Vermont Community Action Council
      • Virgin Money (formerly Circle Lending)
      • Community Capital of Vermont
      • Fox Valley Micro Loan Fund
      • Justine Petersen Housing
      • New Mexico Assets Consortium
      • Opportunity Finance Network
      • RUPRI Center for Rural Entrepreneurship
  • 5. Our Work
    • CBA is implementing its mission through three main activities:
    • Innovative Products and Services
    • CBA Reporter community lenders can provide borrower data through our unique partnerships with major credit bureaus.
    • Education and Training
    • CBA Toolkit is an online resource to collect and share tools and best practices for asset-based credit building strategies.
    • CBA Workshops as webinars and on-site trainings
    • Credit Impact Measure Tool informing how credit reports could provide a cost-effective objective longitudinal measure of economic self-sufficiency
    • Research and Awareness Raising
    • CBA works with national partners to understand and impact policy, conduct research, and create better understanding around credit building
    • Longitudinal Research with Justine Petersen & St. Louis University
  • 6. CBA Premise “ A Credit Score is a Financial Asset” People with a good credit rating will save approximately $250,000 in interest throughout their working lives Good credit decreases the cost of doing business for micro-entrepreneurs so that they are more competitive in the marketplace. A business vehicle will cost $50 less a month on a 36-month loan.
  • 7. Credit Catch-22
    • Families with low or poor traditional credit have few opportunities to build credit
    • Low credit scores = “underbanked”
    • Good score = financial Inclusion
    • 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)
  • 8. What is Credit Building?
    • X Credit Repair - help individuals remove information on the credit report they know to be true
    • ? Credit Counseling - counsel clients and be able to offer them “debt management plans”
    • ! Credit Education - provide general educational information around credit through websites, workshops, etc.
    • ! Credit Coaching - provide individual support and strategies for people to create or improve their credit profile
    • ! Credit Building - provide asset building products and services to help people create or improve their credit profile
  • 9. Credit builder 5-step
    • Step 1 : Credit Education
    • many people are creditworthy, but not credit educated
    • Step 2 : Know the Score
    • Know the credit profile of your clients and pull a credit report at every client intake
    • Step 3: Get the Good Stuff Going
    • Build NEW good credit versus dwelling on old bad credit
    • Step 4: Create a Credit Action Plan
    • Step 5: Delve Deeper out of Debt
  • 10.
    • Non profit challenge:
    • Few nonprofit and other small lenders furnish loan data to the credit bureaus.
      • Policy barriers for small loan portfolios/non-paying clients
      • Technology gaps
      • Need for support and technical assistance
  • 11.  
  • 12.
      • Key benefits that Credit Builders Alliance members enjoy:
      • Actually get to report!
      • Your organization’s name on the credit reports of your borrowers.
      • No fuss application process
      • Centralized e-Oscar support
      • CBA is your time-saving interface with the credit bureaus
      • Ongoing Technical Support 5 day-a-week unlimited support
      • Best Practices and Awareness Raising
    Leverage your Lending: CBA Reporter
  • 13. Why Report?
    • Stronger Loan Portfolio
    • Credibility
    • Diversified Loan Portfolio
    • Cost-effective Asset Building
    • Measurable Community Impact
    • Better Borrowers
    • Stronger Bank Partnerships
    • New Fundraising Tool
    • Management Efficiencies
    • Opportunities for clients to build credit
  • 14. CBA Reporter
    • $325 set-up fee
    • includes all credit bureau application and site visit fees
    • $600 annual Reporter membership dues
    • includes e-Oscar account ($85), monthly upload support, on-going technical assistance
    • Total price = $925 first year
    • then $600 annually
  • 15.
    • Vikki Frank
    • Executive Director
    • [email_address]
    • www.creditbuildersalliance.org
    • Tel: 202-730-9390
    • Dir: 202-368-0500
    Build credit. Build assets.