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CFED Partner Announces Launch of Chicago Credit Building Coalition
By Rashmi Joshi on 08/09/2011 @ 11:30 AM
CFED's Vice President of External Relations Kim Pate passed this along - how interesting!
Chicago, IL (July 22, 2011) — Representatives of 11 Chicago-area community development organizations and Citi will gather today to applaud Chicago City Treasurer Stephanie D. Neely’s launch of the Bank On Chicago financial inclusion initiative and to announce that they have joined together to form the Chicago Credit Building Coalition (CCBC).
The CCBC will expand financial inclusion for low- and moderate-income residents in the Chicago area by complementing existing financial education programs with a financial tool, provided by Citi, that supports credit-building. The community development organizations Justine PETERSEN and Credit Builders Alliance will provide the CCBC members with assistance and tools to increase their capacity to provide these services and to monitor the impact that financial coaching complemented by the use of this product can have on individuals’ credit profiles.
“Having a good credit profile is essential for lowering an individual’s day-to-day transaction costs, growing their assets through small business or homeownership and securing employment, said Stephanie D. Neely, Chicago City Treasurer. “These organizations are demonstrating their commitment to helping underserved Chicago residents, and by working together they will have a tremendous, positive impact.”
The Chicago Credit Building Coalition members are: Chicago Urban League; Citi Community Development; Illinois Hispanic Chamber of Commerce; JVS Chicago; Local Initiatives Support Corporation of Chicago; Mercy Housing Lakefront; National Latino Education Institute; Neighborhood Housing Services; Partners in Community Building; The Resurrection Project; South Side Community Federal Credit Union; and Spanish Coalition for Housing. Supporting partners of the CCBC are Justine PETERSEN and Credit Builders Alliance.
Highlights of the program include:
- Financial coaching and education to help participants improve their financial behavior and learn credit- and asset-building best practices.
- Client access to a secured or unsecured credit card provided by Citi subsidiary Banamex USA to help individuals build their credit history.
- A streamlined, Web-based system to help nonprofit partners assist clients with applying for and monitoring their use of the credit card. Nonprofit Justine PETERSEN developed the system along with Citi Microfinance and will provide technical assistance to the CCBC members for card processing.
- The ability for CCBC members to monitor changes in their clients’ credit score, through the assistance of Credit Builders Alliance, which will provide training and access to CCBC members and the opportunity to identify those programs that are most impactful.
“Especially in the current economic climate, being creditworthy is essential to economic empowerment,” said Donna Rockin, Director of the Illinois SBDC / Duman Microenterprise Center at JVS Chicago, which is serving as the lead coalition member. “We have provided one-on-one credit counseling for over 20,000 individuals since 1997. We’ve seen that the right kinds of intervention can take people with low or no credit scores and with significant debt to the point where they can buy a home or start a business. By coming together to offer this innovative package of financial tools and education, we are going to have a tremendous impact in terms of helping Chicago residents establish and raise their credit scores. It’s a collaborative and comprehensive model that other cities will want to adopt.”
"The communities we serve need not only financial coaching but also access to financial products and services in order to achieve financial inclusion and success," said Elba Aranda-Suh, Executive Director of the National Latino Education Institute. "Citi's ability to provide useful financial tools that also will enable people to raise their credit scores complements the critical financial coaching and education that the coalition members are already providing."
The Banamex USA credit card is already in use in other programs to help people with low credit scores or no credit to build their histories and increase their credit scores. For applicants with no or limited credit history, the secured card requires a small minimum cardholder security deposit of $300 and a commitment as prescribed by the community organization to attend a series of free financial education classes on improving one’s credit scores and financial capability. Early pilots indicate that customers have increased their scores by an average of 50 points through the use of the card and financial education resources. Close to 23 percent of customers opening a Banamex USA card originally had no reported credit history.
“This initiative is the kind of collaborative approach that we’ve found to be effective in our ongoing efforts to expand financial inclusion,” said George Wright, Midwest Region Director for Citi Community Development. “These local partners, with in-depth knowledge of the financial challenges impacting Chicago residents, are combining forces to maximize impact and scale of their credit building efforts. We think that’s a smart strategy and we’re proud to provide the technical assistance and the financial product to move this initiative forward.”
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