Benefits of Credit Reporting

Transcription

1 Benefits of Credit Reporting February 16 th 2pm EST 2016 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). Noncommercial uses are permitted on the condition that you include an attribution to Credit Builders Alliance. If you alter, transform, or build upon this work, you may distribute the resulting work only under the same or similar license to this one. More information regarding the license is at: Requests for permissions beyond the scope of the license should be directed to Credit Builders Alliance, Inc., at Credit Builders Alliance ("CBA"), a not-for-profit organization, makes this information available for informational purposes only. This information is not intended as legal, financial, 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.

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3 Introduction: Who is Credit Builders Alliance? To help organizations move people from poverty to prosperity through Credit Building. Good Credit is an Asset Mission driven nonprofits and other entities are uniquely positioned to help the households they serve build credit as an asset often the FOUNDATIONAL asset.

4 Introduction: CBA Credit Builder Community

5 Introduction: CBA s Platform Supports Credit Building Programs by connecting nonprofits and municipalities to the credit bureaus for reporting and accessing reports Practitioners through technical assistance, training, networking & professional development Products that offer innovative, replicable and scalable solutions for consumers and small business owners Policies to enhance credit building outcomes for nonprofits and their clients CBA CBA Credit Credit Building Community

6 Why Credit Building? Credit Realities among US Consumers Approximately 45.4 million Americans (almost 20 percent of the population) have unscored credit records or are credit invisible. (CFPB)

7 Why Credit Building? Credit Realities among US Consumers Consumers in low-income neighborhoods are more likely to be credit invisible or to have an unscored record Black and Hispanic consumers are almost twice as likely to have limited credit records (CFPB)

8 Why Credit Building? Credit Realities among US Consumers

9 THE BENEFITS OF CREDIT REPORTING: FOR LENDERS Credit Builders Alliance, Inc. Some rights reserved.

10 Hear from a CBA Member

11 Benefits of Credit Reporting: for Lenders

12 % of Total Organizations Benefits of Credit Reporting: for Lenders Services Offered by Respondents 70% 60% 50% 59% 64% 40% 30% 20% 30% 40% 23% 10% 0% 11% 4% 8%

13 % of Organizations that Experienced Benefit Benefits of Credit Reporting: for Lenders 80% Loan Portfolio Improvements 70% 73% 60% 50% 40% 41% 30% 20% 28% 10% 18% 11% 10% 0% Increased on-time payments. Decreased charge off rates. More client interest in better credit. More client interest in other services. No positive/measurable change. Unknown if positive/negative.

14 % Indicated Yes Benefits of Credit Reporting: for Lenders Is CBA Reporter Worth the Cost? 100% 75% 90% 75% 84% 95% 96% 94% 100% 90% 86% 96% 50% 25% 0% < 3 Years < 6 years Reporting > 6 years Reporting > 8 years Reporting Credit Builder Mortgage Small Business < 999,999 > 1,000,000 All Time as CBA Reporter Loans Offered Annual Revenue 90% of all respondents agree that CBA Reporter is worth the cost

15 Benefits of Credit Reporting: for Lenders Why do organizations use CBA Reporter? Improves Credit History/Scores Helps clients monitor credit Improves collections Positively affects fund development Increases credibility and respect in the community Helps clients stay proactive and engaged Provides leverage for repayment Teaching tool for credit education

16 Benefits of Credit Reporting: for Lenders Reporting has reduced delinquencies thus affecting funding. It has allowed our organization to become more professional and credible to the borrowers. [CBA Reporter] gives us a leverage point with clients who care about their credit; incentivizing them to get their account current. Credit reporting through CBA has improved collections on loans over 90 days outstanding by 100% in the first year reporting. In addition, clients desire the fact that they can improve their credit scores by having a loan with our company.

17 Benefits of Credit Reporting: for Lenders [CBA Reporter] adds validity to our microloan program as a credit-building tool. [We are] slowly building reputation as [a] credit building and loan provider. [It s] nice to speak about it to funder[s]. Our customers overall seem to be more conscientious about paying on time as they know if they don't it will negatively affect their credit scores. We have also been able to demonstrate to customers that their credit scores have increased as a result of our reporting through CBA. That makes for a positive customer relations experience and an increase in word of mouth recognition of our CDFI as well.

18 THE BENEFITS OF CREDIT REPORTING: FOR CLIENTS

19 Hear from a CBA Member

20 Benefits of Credit Reporting: for Clients Analysis by Experian:

21 Benefits of Credit Reporting: for Clients Analysis by Experian:

22 Benefits of Credit Reporting: for Clients Analysis by Experian:

23 CBA Services Reported to consumer and business credit bureaus every month by over 181 members CBA Reporter CBA Business Reporter CBA Rent Reporter CBA Access For financial counseling, underwriting & outcome tracking in the last year

24 CBA s Reporter Service Pricing Initial Membership and Set up (Year 1): CBA Membership Fee: $315 ($295 if paid within 30 days) One-Time Setup Fee: $750 for all three bureaus Annual Costs (starting Year 2): $315 annual membership fee Reporter Renewal Fee Based on size of your portfolio Up to 50 Loans: $ Loans: $ Loans: $1, ,000 Loans: $1,400 More than $1,000: Contact CBA for custom pricing

25 Rapid Response Team Credit Builders Alliance is now offering free loan reporter training sessions to emerging reporters to discuss the detailed process of reporting borrowers loans to the credit bureaus and how CBA assists in that process Trainings focus on requirements to set up loan reporting, review of Fair Credit Reporting Act regulations, and best practices in loan reporting

26 Get Started with CBA! Write or call to get started! CBA Membership Team

27 CBA Member Referral Program $50 discount on annual membership fee for referring non-profit lenders who become CBA members. Refer up to 5 new groups per year and wipe out your membership fee! Contact dara@creditbuildersalliance.org for more information