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    • Build Credit. Build Assets. AFI University November 7, 2007 Vikki Frank, Executive Director
    • Mission
      • CBA is a new non-profit organization creating innovative solutions for asset building organizations to help low and moderate income families build stronger credit.
    • Our Work
      • CBA is implementing its mission through three main activities:
      • CBA Reporter
      • CBA is a a One-Stop Shop for community lenders to provide and receive data critical to their mission through our unique partnerships with major credit bureaus.
      • Credit Builders Toolkit
      • An online resource to collect and share tools and best practices for asset-based credit building strategies.
      • Research and Awareness Raising
      • Working with our partners to implement research and create new credit building opportunities for low-income and underserved populations
    • Why Credit Scores?
      • Low credit scores = “underbanked”
      • A good credit score provides:
        • access to mainstream financing
        • lower interest rates
        • safer products
        • less vulnerability to predatory lenders
        • access to rental housing, employment, insurance, etc.
    • Why Credit Scores?
      • “ 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 begin to get good credit and how to safeguard or improve her credit if hard times hit.
    • Why Credit? CBA’s Premise: “Credit Score is a Financial Asset” People with a good credit rating will save approximately $250,000 in interest throughout their working lives A homeowner will save more than $250,000 on a 30-year fixed $300,000 mortgage. A car buyer will save up to $50 a month on a 36-month car loan.
    • Why Credit?
      • “ Credit Score is a Financial Asset”
      • Access to prime, safe financial services is increasingly determined by an individual’s credit score.
        • Credit score helps families build wealth -- a home, a business, education.
        • Credit also impacts opportunities and access to:
        • rental housing
        • car insurance
        • auto purchases
        • employment
        • access to checking, savings, and investment accounts
        • utilities and phones
        • medical services
    • 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 loans (like car loans), leases, mortgages, credit cards.
    • Credit Tips
      • Timing is Almost Everything
      • A RECENT history of ON-TIME repayments on DIVERSE CREDIT account S REPORTED to a major credit bureau is the best way towards a good credit score.
          • Six to twelve months of on-time payments can build a 600 score with no other history .
          • Six months of on-time payments toward a $100 loan can increase a score 50-100 points.
    • What is credit?
      • Demonstrating good financial behavior based on information not in a traditional credit report
      • Requires lenders to manually underwrite
      • Fannie and Freddie push mortgage underwriters to accept Rent plus 2 lines of “alternative credit” when no credit exists
      • PRBC is a new credit reporting agency that allows individuals to build an alternative credit report
    • What to do as an IDA practitioner?
        • Recognize how important good credit is
        • Educate yourself on credit
        • Know the credit profile of your clients
        • Pull a credit report at client intake & review it
        • Help your client “own” their credit history
        • Encourage your client to fix incorrect information
        • Help your client build a better credit future
        • Educate/Coach clients towards good credit
        • Offer credit building tools
    • 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
    • Measure your Impact Credit reports could provide a cost-effective objective longitudinal measure of financial behavior and behavior change to look at client and community impact: Best Practices in financial education and asset building Increased Access to Bank Products Increased Borrowing Power Savings in Cost of Borrowing/Interest But …you would need access to credit reports
    • Vikki Frank Executive Director 202-730-9390 [email_address] www.creditbuildersalliance.org Recent Press: Helping Clients Build Credit Federal Reserve Bank of Boston: www.bos.frb.org/commdev/c&b/2007/fall/