Building assets is one of the most effective pathways out of generational poverty and into financial stability. To build assets, families need financial education, asset building opportunities, and the ability to protect assets. Building and maintaining credit is a key part of this process. This session will provide an introduction to the strategies and policies that are helping families build credit and get on the path to financial stability. Presenters Sarah Chenven, Credit Builders Alliance Abby Wood, Metropolitan Family Services

2. What we will cover today
 Program overview of the Ways to Work
Program
 Our credit building “recipe”
 3 program participant profiles

3. Program Overview
• National Program
Model
• 35 locations throughout
the US
• All programs housed at
local non profit
organizations
• National loan pool
• Vehicle loans only

4. Program Eligibility
 Resident of Multnomah, Washington,
Clackamas (and some others) in
Oregon or SW Washington
 18+ years old
 Valid drivers license
 Involved parent(s) of dependent
child(ren)
 Challenged credit (score of 640 and
below)
 Ability to repay the loan

5. Program Eligibility
(continued)
 Employed at least three months, and
working at least 20 hours/week.
 Yearly household income less than 80%
of the area median family income (see
below)
Household size Income limit
2 person $44,400
3 person $49,500
4 person $55,500
5 person $59,950
6 person $64,400

6. Types of Auto Loans
•Purchase loan at 8% interest
–$5,000-$6,000 with 24-30 month term
–$6001-$8,000 with 30-36 month term
•Repair loan at 8% interest
–$500-$1,500 with 12 month term
•Refinance loan at 8% interest
–$5,000-$6,000 with 24-30 month term
–$6001-$8,000 with 30-36 month term

7. Ways to Work Loan vs. Regular Car
loan
Ways to Work Loan: Market Rate Loan:
Loan
Amount
Interest
Rate
Term Total of
all
paymen
ts
Total
interest
paid
$5000 8% 30 $5545 $605
$6500 8% 36 $7331 $891
Loan
Amount
Interest
Rate
Term Total of
all
payment
s
Total
interest
paid
$5000 20% 30 $6394 $1,394
$6500 25% 36 $9,303 $2,803

8. Having a car means….
At work
At home
For your family.

9. •Financial goal setting
•Budget education
•Credit review and education
•Credit report planning
•Client relationship building
Ongoing
credit
building and
repair

10. Three Real Ways to Work Participants
•Participant one:
•Loan entry588 6 months534 End of loan700
•Participant two:
•Loan entry462 6 months526
•Participant three:
•Loan entry n/a 6 months634
•Participant four:
•Loan entry560 6 months588 End of loan523

11. Questions?

12. Credit as an Asset
Neighborhood Partnerships,
October 30, 2014
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or other advice, and you and your clients should consult qualified advisors before making any decisions. CBA does not represent that any of the information will produce results.

13. What you will learn
• How to describe how credit as an asset and the
specific ways that improved credit can impact an
individual’s financial stability.
• A basic understanding of credit building and how
it differs from credit/debt counseling, and credit
repair.
• How CBA enables nonprofits provide credit
building opportunities to their clients in order to
achieve those goals

14. What is Credit?
Credo: (kreed’ o) v. trust
Credit: (kred’ it) n. value; worth
Dette: (Det)
n. A sum of money that is owed or due
Debitum:
n. Something owed
?!@

15. “Credit is the
passport to the
new economy”
--Andrea Levere,
CFED

16. Why Credit Building?
Having no credit or poor credit usually brings individuals to
the same place: application denial.
Underserved populations, such as low-income households,
households of color, immigrants, and younger consumers, are
more likely to have no or low credit histories. Often times this
is because they are not connected to the financial mainstream
with a savings or checking account, which makes it much
tougher to get a traditional credit card or bank loan.

17. Shifting the Paradigm
Credit is a
deficit
Credit is
an ASSET!

18. Why Credit Building?
PRODUCTS MATTER
Without access to affordable credit it is difficult if not
impossible to achieve or maintain financial stability or security
Paid in Full each month =
30 day 0% loan
400%+ APR =
cycle of debt

19. What and how much
we pay for credit
How we store & manage our
money
How we get around
Where we live
The cost of
household/ personal
needs & wants
Why Credit Building?
OPTIONS & OPPORTUNITIES MATTER

20. Why Credit Building?
CASH FLOW & SAVINGS MATTER
Potential Savings
each month = $67
over 5 years = $4,020
$10,000 auto loan
5 year term
Score
Interest
Rate
Monthly
Payment
500 17% $249.00
620 11% $217.00
720 3% $182.00
Source: www.myfico.com
Potential Savings
each month = $192
over 30 years = $69,280
$100,000 mortgage
30 year fixed
Score
Interest
Rate
Monthly
Payment
<620 N/A N/A
620 5.6% $1,153
760 4% $960

21. Why Credit Building?
ASSET BUILDING MATTERS
620+ 650+
Lenders generally require a
personal credit history

22. What is Credit Building?
CREDIT BUILDING is fundamentally different from
Credit Repair and Credit Counseling:
CREDIT REPAIR: Reducing current debt loads and paying
off historical accounts in collections.
CREDIT COUNSELING: Addressing urgent current credit
challenges.

23. What is Credit Building?
CREDIT BUILDING:
The act of making on-time
monthly payments on a
financial product such as an
installment loan or a credit
card that is reported by the
creditor to the major credit
bureaus
780
513
657
824
456

24. What is Credit Building?
Credit Repair = fixing negative history
Credit Counseling = dealing with current crisis
Credit Building = creating opportunities for
the future

25. What is Credit Building?
How do you build credit?
ESTABLISH & MAINTAIN ACTIVE TRADE LINES =
ON-TIME payments
REPORTED to a credit bureau
EVERY month
BUILDS credit

26. What is Credit Building?
Best Practice
 3 ACTIVE trade lines always paid ON-TIME!
 MIX of installment and revolving
 Installment: assess affordability of monthly
payment
 Revolving: maintain below 30% & don’t use for
general consumption
 6 months of history and activity
 PAIR with credit education & support

27. The Catch?
Opening and successfully
managing financial products is
key to building and maintaining
a good credit history
BUT…
Individuals, families and
communities with no, thin or
poor traditional credit histories
have few opportunities to build
good credit

28. Credit Builders Alliance
400 Members and Growing

29. CBA’s Credit Builder
Platform
Reported to consumer and business credit bureaus
every month by over 160 members
CBA
Business
Reporter
CBA Access
CBA
Reporter
CBA Rent
Reporter
For financial counseling,
underwriting & outcome
tracking in the last 12 months

30. Conclusion
CBA’s Advantage
Join our CBA Credit Builder Community©
Invest in your Credit Building Capacity!
The greatest source of credit building
expertise lies in the combined
experience and knowledge of
practitioners on the ground.
http://creditbuildersalliance.org/
become-member

31. Get Started with CBA!
Write or call to get started!
CBA
202-730-9390
reporter@creditbuildersalliance.org
programs@creditbuildersalliance.org