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Credit as Asset Building Training

Credit as Asset Building Training. Introductions. Katie Kristensen Credit Building Manager. Nikki Martinez Project Manager. Justine PETERSEN.

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Credit as Asset Building Training

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  1. Credit as Asset Building Training

  2. Introductions Katie Kristensen Credit Building Manager Nikki Martinez Project Manager

  3. Justine PETERSEN Our mission is to connect low- and moderate-income families with institutional resources in order to build financial assets and create enduring change

  4. National partnership to couple financial products with financial counseling provided by nonprofit and community partners.

  5. Agenda • Best Practice Update • Credit Building as an Asset • Credit Building and Impact • Product and Eligibility Overview • Product Implementation • Next Steps

  6. Credit Building Nation Creditbuildingnation.org

  7. Online Application • Access the online application at https://greatrivers.commongoalsapp.com/ to get started. • press “Sign up now!” to create an account. Input your email, personal information, and password. • need to verify it through the email you provided. Press “Activate Your Account”and input the username and password provided in email.

  8. Online Loan Management • Access online loan management at https://greatrivers.commongoalsportal.com/ to manage your case load or review a individual loan • Use email as username, press “forgot password” • Need to verify it through the email you provided. Press “Activate Your Account”and input the username and password provided in email.

  9. Financial Capability

  10. 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, reported to at least one credit bureau. It’s about: * Getting the Good Stuff Going * Creating Opportunities for the Future * Changing Behaviors, Showing on Time Payments

  11. Our Passion…

  12. $300 Credit Building loan $300 into locked savings account Client makes monthly loan payments which may earn a match Credit Building Loans Score increases as monthly payments reported Clients receives up to $300 to be used for secured card/ credit building activities

  13. Celebrating Success 98% of account holders making monthly on-time payments We had 48 partners manage 386 accounts in 2018, for an average of over 8 accounts per partner 89% of clients have been approved for a secured credit card Participants with credit scores below 520 saw an average increase of 90 points Participants with credit scores between 521-620 saw an average increase of 29 points

  14. Credit Building Loan Outcomes • 3x higher credit score gains • Credit Building Loan s- 35 point score increase • Non-borrowers- 10 point score increase • Almost 3x as likely to gain a score and keep it • Borrowers- higher 6 and 12 month employment retention rates

  15. Success Story: James Skiles April 2013 Aug 2013 May 2014 • Credit Score 517 • Unstable housing • Delinquent Student Loans • 7,000 Medical Debt • Credit Score 598 • Employed $12/HR • Renting • Repayment on debt

  16. Credit Building Loan Eligibility • Accessing financial counseling services (minimum 1 visit) • Account holder must be over the age of 18 years • Demonstrate ability to afford repayment monthly • No foreclosures or late payments in the last 3 months • The product must offer potential to improve the credit portfolio • Credit card utilization ratios are under 30% (ideal)

  17. Assessing Readiness for Credit Begins during one-on-one counseling: • Establish a budget • Review credit report • Assess client readiness • Consider client’s credit buy-in and goals

  18. Know the Credit Report When reviewing the credit report, look for: • How many active lines of credit does the client have? • Of those, how many are revolving and how many are installments? • What is their payment pattern on active lines? • How much in collection/charge off debt? • How old is the debt? • When will it hit the statute of limitations? • Are any of the creditors likely to sue? • Any foreclosures, public records, etc.?

  19. An “Ideal” Credit Building Loan Candidate Factors that constitute an “ideal” candidate: • Credit invisible – no credit score • Thin file client – one or few credit lines • Collection debt only • Denied products or services in the past • Recently discharged from a bankruptcy

  20. Who is Not a Fit? • Not Beneficial • Client has 3(+) active lines of credit (variety) • Not Ready • Active lines are not paid on time • Client has no income • Client has a lot of (bad) debt and is talking about filing bankruptcy • No Buy-In • Client does not understand a loan or has not been making consistent payments • Client is uninterested in continuing to build credit upon program completion

  21. Credit Building Loan Process

  22. Opening a Credit Building Loan Financial Coach Completes specified docs (Loan Application, Review and Checklist, Financial Action Plan and Client’s Credit Report and Budget) with client and submits them through the Loan Application Portal. Great Rivers Community Capital GRCC will review application and all documents and either approve or hold application

  23. Loan Portal Application • Press 3 lines button in top left • Select “Applications” on the left-hand side and then “Apply Online” to create a new application

  24. Loan Application Portal • Several loans to choose from • Select correct loan and press “Apply” button

  25. Loan Application Portal

  26. Loan Application Portal: Required Documents

  27. Loan Application Portal: Submission

  28. Opening a Credit Building Loan Account Great Rivers Community Capital Notifies Financial Coach Ready to Close Financial Coach Schedules appointment with the client With 48 hours advance notice Great Rivers Community Capital Prepares & Send Closing Documents to Financial Coach

  29. Opening a Credit Building Loan Account Financial Coach completes the following closing docs: • Authorization to Release Information • Privacy Notice • Promissory Note/Truth-in-Lending Disclosure • Amortization Schedule • ACH Form (if applicable) • W-9 Form • Great Rivers Closing Sheet • Disbursement Request and Authorization

  30. Privacy Policy

  31. Truth in Lending Disclosure

  32. Promissory Note

  33. Amortization Schedule

  34. ACH Authorization Agreement

  35. W-9 Form

  36. GRCC Loan Closing Sheet

  37. Disbursement Request and Authorization

  38. Opening a Credit Building Loan Account Financial Coach Completes DocuSign Client Completes DocuSign Great Rivers Community Capital Loan payments begin on designated day

  39. Credit Building Loan Process Borrowers will: • Log into the Online Portal • Make monthly payments by the 15ththrough one of the acceptable Payment Options: • Check payable to “Great Rivers Community Capital” • Debit Card/Credit Card over the phone • Prepaid Debit Card (routing and account numbers required) • Online Bill Pay through their bank • ACH from Checking or Savings Account

  40. Credit Building Loan Process Financial Coach Contacts Borrower to check-in before 1st payment and when client is delinquent Financial Coach Reviews the client delinquency monthly using coach portal/ emails received by GRCC

  41. Online Loan Portal

  42. Online Loan Portal

  43. Online Loan Portal

  44. Online Loan Portal

  45. Online Loan Portal

  46. Delinquent Borrower Policy • Delinquencies happen • Product designed to provide on-time payment practice • Provide credit-building opportunity with little risk for negative credit impact

  47. Premature Account Closure Example of Closed Account Due to Change in Financial Situation

  48. Managing Delinquencies

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