2013 Credit Builders Alliance, Inc. Some rights reserved. © 2013 Credit Builders Alliance,

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. © 2013 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: http://creativecommons.org/licenses/by-nc-sa/3.0/. Requests for permissions beyond the scope of the license should be directed to Credit Builders Alliance, Inc., at www.creditbuildersalliance.org/.http://creativecommons.org/licenses/by-nc-sa/3.0/www.creditbuildersalliance.org/ 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. Credit as an Asset Date

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. 9:00 – 9:30 Welcome and Introductions Who is Credit Builders Alliance 9:30 – 10:30 Why Credit Building? The Changing Credit Industry 10:30 – 10:45Break 10:45 – 12:30CBA’s Credit Builder 5-Step© Step 1: Consider the Goal 12:30 – 1:00Lunch 1:00 – 2:15 Step 2: Know the Score 2:15 - 2:30Break 2:30 – 3:30 Step 3: Get the Good Stuff Going 3:30 – 3:45Break 3:45 – 4:45 Step 4: Deal with Debt Step 5: Leverage Success 4:45 – 5:00 Recap & Post-training survey Draft Training Agenda

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Credit is an Asset This training was made possible through the generous support of Annie E. Casey Foundation, a private charitable organization, dedicated to helping build better futures for disadvantaged children in the United States. We thank them for their support and acknowledge that the material presented in this webinar are those of CBA’s alone and do not necessarily reflect the opinions of the Foundation.

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Welcome! ICEBREAKER: Tell us about yourself and what you hope to gain from this training. 1A2 Introduction: First Impressions

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. What this training OFFERS An introduction to CBA’s Credit Building philosophy and the credit building field An overview of key concepts and strategies to maximize credit building success for youth An exploration of tools and resources to develop/ enhance the integration of credit building strategies into supportive efforts with youth An opportunity to share with and learn from others

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. What this training DOES NOT OFFER Extensive training on credit coaching, credit counseling, or debt management for youth Training on identity theft or fraud Check out the additional resources in your folders for lots of helpful resources that we may not cover in detail in this training!

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. To create innovative solutions for asset building organizations helping low- and modest income households build credit and financial access. 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. Introduction: CBA Mission & Philosophy

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Credit Builder Community Members Network & Increase Visibility (Credit Building Community Report & Pull Reports (Credit Building Platform) Innovate & Engage with Field (Credit Building Hot Topics) Build Capacity & Sustainability (Credit Building Toolkit) CBA members share with and learn from each other Connect to the credit bureaus through our one- of-a-kind umbrella arrangements Updates on relevant innovations, products, services, activity, and best practices in the field Provide valuable technical assistance, training, and consulting Introduction: CBA’s One-Stop-Shop

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Introduction: Definitions A CREDIT HISTORY is a record of transactions involving the use of credit. If you do not have a credit history you will not have a credit report A CREDIT REPORT is a record of a consumer’s credit history. A CREDIT SCORE is number that summarizes your credit risk. It is used by lenders to assess the odds that you will become delinquent in repaying your debt within the next two years, and is based on a snapshot of your credit report at a particular point in time.. 78 0 513 657 824 456 GOOD CREDIT

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Credo: CRED o (kreed’ o) v. trust Credit: CRED it (kred’ it) n. value; worth Introduction: First Impressions

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Myth or Fact: Your credit SCORE may impact the following…MythFact …the rate you’re offered on a car loanMythFact …the rate you’re offered on a government student loanMythFact …the monthly cost of car insuranceMythFact …whether you will get offered a particular jobMythFact …the amount of your utility billsMythFact …the rate you’re offered on a mortgageMythFact …whether you have to leave a deposit with your utility companyMythFact …whether a bank will let you open a checking accountMythFact …whether your will be able to rent an apartmentMythFact …the rate you’re offered on a private student loanMythFact Why Credit Building? Myths and Facts

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Paid in Full each month = 30 day 0% loan 400%+ APR; cycle of debt Without access, assets & savings you cannot achieve or maintain financial stability or security Why Credit Building? Two Tiered System

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. The average Credit Score of a Millennial in 2013 was 628, positioning them at the tipping point between higher cost and more affordable credit products. Why Credit Building? Youth

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Good Credit = ACCESS Why Credit Building? Credit Matters Where we live How we store & manage our money How we get around What and how much we pay for credit The cost of household/ personal needs & wants

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. $10,000 auto loan, 5 year term ScoreInterest RateMonthly Payment 50017%$249.00 62011%$217.00 7203%$182.00 Potential Savings each month = $67 over 5 years = $4,020 Source: www.myfico.com Why Credit Building? Credit Matters Good Credit = SAVINGS

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Home-ownership Small Businesses Higher Education Good Credit = ASSETS Why Credit Building? Credit Matters

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. In many states, credit history can still affect employment opportunities Why Credit Building? Credit Matters Good Credit = OPPORTUNITY

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Youth with no, “thin” or poor traditional credit histories have few opportunities to build good credit Why Credit Building? BUT….

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Youth as Consumers Lenders & Other Businesses Credit Reporting Agencies Risk Score Modelers The Government Consumer Reporting Agencies The Players SOURCE: Experian Highly competitive but…data submission uniformity – Metro2 files sent electronically Models designed differently based on consumer files Rulemaking & enforcement authority historically fractured Voluntarily submit data – still regional inconsistencies

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Fair Credit Reporting Act Credit bureaus responsible for integrity and accuracy of data in databases Consumers have right to see & dispute information and receive verified response within 30 days Data providers need to report fully and consistently and verify data upon dispute Credit Reporting Today A Regulated Industry

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Consumer Finance Protection Bureau Makes and enforces rules Credit Bureaus Creditors Empowers consumers to take more control over their economic lives Division for Consumer Education & Engagement Know Before You Owe initiatives Credit Reporting Today CFPB: A Game Changer?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Why Credit Building? Defining Credit Building We Know Good Credit is an Asset… …how can we help our clients build it?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. First, what exactly is Credit Building? Q:Q: Q:Q: What is Credit Building? What?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Credit Repair = fixing negative history Credit Counseling= dealing with current crisis Credit Building = creating opportunities for the future A: What is Credit Building? What?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. ON-TIME payments REPORTED to a credit bureau EVERY month BUILDS credit = ACTIVE TRADE LINES A:A: A:A: What is Credit Building? How?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. WHAT IS AN ACTIVE TRADE LINE? An Active Installment (loan):  Has a Balance  Has a monthly payment  Is not closed An Active Revolving (credit card):  Doesn’t need to have balance or payment  A payment has been made in the past 6 months (date of last activity) What is Credit Building? How?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. What is Credit Building? More on Active lines… A collection/charge-off can never be an active line of credit An open line of credit is not the same thing as an active line of credit Just because it doesn’t say closed/paid doesn’t mean it’s active A loan paid off is no longer active A student loan in deferment is not active, but has the potential to be active

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. 3 ACTIVE trade lines MIX of installment and revolving 6 months What is Credit Building? Best Practice

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. The CBA Credit Builder 5-Step© An Action Plan Framework for working with youth to build credit What is Credit Building? How?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. CBA Credit-Builder 5-Step© Step 1: Consider the Goal Help youth articulate Specific, Measurable, Achievable, Realistic & Time-bound (SMART) goals Connect the importance of good credit to these goals.

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Consider the Goal ACTIVITY Help Youth identify 1-3 SMART goals In groups discuss these goals, how credit building is important to achieving these goals, and what steps the youth can take to achieve these goals.

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Consider the Goal Get the Good Stuff Going Deal with Debt Leverage Success CBA Credit-Builder 5-Step© Step 2: Know the Score

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Review your clients’ credit reports to determine their readiness for credit building. Do they have a credit report? Any debt or accounts in collections? Have they experienced any Identity Theft or fraud? CBA Credit-Builder 5-Step© Step 2: Know the Score

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. MYTH OR FACT? MythFact There is nothing you can do once a collection agency begins to call you other than pay back your debt. MythFact If you pay all your monthly bills on time, you will have a high credit score. MythFact If you only have Collection Accounts on your credit report, you may not have a score. MythFact You can ruin your credit by applying for a few new lines of credit (making inquiries). MythFact It is possible to go from “unscored” to a score of 699 in 6 months if you have one reported loan you pay on time each month. MythFact A single delinquency can reduce your score by 45 to 125 points. MythFact Your credit score will jump up when you pay off a collection account. MythFact Credit cards can be excellent vehicles for building credit. MythFact Know the Score Credit Quiz

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Know the Score What we know Why so many scores? Q: A: Lenders use different scores designed to measure risk for different types of lending -- including mortgage, auto, and personal finance loans.

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Know the Score What we know Non-lenders may also use credit scores calculated for other purposes:  Insurance companies may use credit scores not only to predict the likelihood of payment, but also to assess a consumer’s risk of being in an accident and/or filing a complaint;  Hospitals may use scores to assess capacity to pay medical expenses and debt;  Telecoms companies may review scores to determine whether or not to require a consumer to make a down payment in order to establish an account;  Landlords may use scores to determine whether or not a consumer qualifies for rental housing; and  Banks may use scores to determine an applicant’s eligibility for a checking or savings account. A:

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. VantageScore 3.0: 300 - 850 Know the Score Vantage Score – and the runner up is… Consumer BehaviorAdvice…Impact on Score… Payment HistoryPay all bills on-timeExtremely Influential Age & Type of CreditMaintain a mix of accountsHighly Influential % of Credit Limit UsedKeep revolving balances under 30%Highly Influential Total Balances/DebtReduce the amount of debt you oweModerately Influential Recent Credit BehaviorDon't open too many accounts too quicklyHigh Risk; usually no credit offers Available CreditOnly open the amount of credit you needModerately Influential

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Know the Score Score Impact Current FICO score680780 Score after one of these is added to credit report: Score Drop Maxing out a credit card650-67010-30735-75525-45 A 30-day delinquency600-62060-100670-69090-110 Settling a credit card debt615-63545-65655-675105-125 Foreclosure575-59585-105620-640140-160 Bankruptcy530-550130-150540-560220-240

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Know the Score Best Practice Pay on-time Maintain 3 active trade lines Have a mix of credit Keep balances low Don’t close old accounts in good standing Inquire judiciously

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Know the Score Scores are Important But… …focus on the trend upwards, the range, and the underlying behavior

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Know the Score And Report! Personal Identifying Information Name Address Social Security Number Date of Birth Credit History Open trade lines Active trade lines Derogatory items such as accounts in collections Public Records Bankruptcies Foreclosures Judgments Liens Inquiries List of creditors and other authorized parties that have requested and received a copy of the credit report in the last 24 months Know the Report! A credit report typically contains:

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Indefinitely Open Accounts in Good Standing 10yrs from date of closure Closed Accounts in Good Standing 7yrs from date of 1 st delinquency Late or missed payments 7yrs from date of charge off Charge Off/Collections 10 (Ch. 7) or 7 (Ch. 13) yrs from date of entry for relief Bankruptcy 7yrs from date of entry Civil Judgment 7yrs Foreclosure 7 yrs from paid date or no limit if unpaid Tax Liens 2yrs Inquiries Know the Score Statute of Limitation

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. There is not just one! Like scores, credit reports are customized by different data sellers for the needs of different businesses and for consumers. Know the Score About Reports Did you know…

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Know the Score Consumer Disclosure Reports Advantages of Consumer Disclosure Reports: 1.Easy to read. 2.Include information about the "Date of First Delinquency," or the date that negative information will "age-off" of a report. 3.List the names of original creditors if an account has been sold to one or more collection agencies, which provides a pathway to disputing errors. 4.Include instructions on how to dispute errors. 5.Allow consumers to monitor and manage their own credit reports. Challenges with Consumer Disclosure Reports 1.Each CRA displays the information they have linked to a consumer’s identifying information. If the information entered to request the report varies, then the information in the report may vary. Only the information that is included in that report will be scored. 2.May be difficult to access online due to security questions that may use complicated wording or be confusing, which can make it difficult for consumers to answer required identification information.

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Know the Score Business Division Reports Advantages of Business Division Reports 1.Reports may be pulled for consumers without Social Security Numbers or who may not be able to answer the security questions required to access a report online through annualcreditreport.com. 2.Scores may be pulled along with reports for significantly less than the cost of purchasing a score through annualcreditreport.com. 3.Reports may be pulled multiple times a year as long as they are pulled for permissible purposes. 4.Reports may be pulled in batches for greater efficiency. Challenges with Business Division Reports 1.Information may look different than it does on a Consumer disclosure report, may be harder to interpret, and may not include important details for disputes like the names of original creditors. 2.CRA contracts have specific covenants about how authorized pullers may and may not share report information or scores with consumers. 3.Numerous codes listed throughout the reports may be confusing. 4.Some information, such as medical debt, may not be clearly marked as such. 5.The names of original creditors may not be provided, making it harder to contact creditors directly related to disputes.

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Peer Learning Share your thoughts on the credit report assessment tool. How useful is it? Can you imagine using it with youth?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Consider the Goal Know the Score Deal with Debt Leverage Success CBA Credit-Builder 5-Step©

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. CBA Credit-Builder 5-Step© Step 3: Get the Good Stuff Going Credit Building… Empowers individuals to make and maintain positive behavior changes Connects youth to responsible financial institutions and products that support savings, credit, and budgeting needs

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. There are many ways your families can to damage or repair credit, but There is only ONE way to BUILD CREDIT! Get the Good Stuff Going Remember…

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. HOW? ON-TIME payments REPORTED to a credit bureau EVERY month BUILDS credit Get the Good Stuff Going Remember…

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. What needs to be on the Credit Report? No Credit Open Credit Active Credit Get the Good Stuff Going: Asset Based Approach to Credit Building

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Financial Capability Every monthly payment is a teachable moment! Education Product Get the Good Stuff Going Financial Capability

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Get the Good Stuff Going Product Models of Success Credit Builder Products can serve many different people and purposes.

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Get the Good Stuff Going: Ways to “provide” credit builder products Create referral relationships with financial institutions Partner with responsible lenders to offer new products

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Accessible to your job seekers Flexible & Affordable Potential for graduation Get the Good Stuff Going A Good Product… BUILDS CREDIT! Get the Good Stuff Going What to Look for in a Good Product

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Full-File Alternative Credit Data Reporting Q: A: What is it? Positive and negative utility, telecoms, and rental payment data reported Get the Good Stuff Going The Alternative Future?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Reporting utility & telecoms payment data enables 40% of previously unscoreable consumers access to prime credit, including: Increasing access by 15% for youth http://perc.net/content/ alternative-data-initiative- adi Get the Good Stuff Going The Alternative Future?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Problem: Unlike homeowners, renters do not build credit by making their monthly housing payments. The Future of Credit Reporting Power of Rent Reporting Pilot Solution: Reporting rental payments offers low-income renters an opportunity to build credit as a financial asset: Mission-driven affordable housing organizations are poised to help them do so. Goal: To catalyze rent reporting as a valuable and viable option for low-income renters to build credit and financial capability.

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Affordable Housing Organization Renter Landlord/ Property Manager Rent Payment Processor The Future of Credit Reporting Power of Rent Reporting Pilot

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Youth are entitled to a lifetime of good credit and credit options: By offering access to safe financial products to youth who cannot access conventional credit, you are meeting one of their CURRENT needs. By ensuring that the creditors report payments, you are helping them with their CURRENT needs and their FUTURE needs. Get the Good Stuff Going Credit Building Matters

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Get the Good Stuff Going Peer Learning How does the product(s) fulfill a youth’s needs? What are the anticipated challenges of this/these products that have not been resolved? What might you need to work on to help ensure the youth is successful? How does this leverage resources/ relationships in the community?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Consider the Goal Know the Score Get the Good Stuff Going Leverage Success CBA Credit-Builder 5-Step©

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Help youth identify the best way to pay down existing debt and which to tackle first Assess accounts in collections. Which ones may fall off their report soon (make sure they understand debt collection rules and their rights in your state). Can they negotiate lump sum settlements? CBA Credit-Builder 5-Step© Step 4: Deal with Debt

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Deal with Debt Things to Remember Debt management ALONE is not a Credit Building strategy

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Is there debt on the credit report that they do not recognize? Help youth understand the information on the report and dispute errors: With the credit bureaus Directly with the creditor Deal with Debt Take Action: Disputes “One in four consumers identified errors on their credit reports that might affect their credit scores” Deal with Debt Take Action: Disputes

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Youth may need to navigate competing priorities when making decisions about paying off debt including: Get anything that’s delinquent back on track before it goes to collections Decrease revolving credit utilization rate Pay off highest interest rate Pay off smallest balances Deal with Debt Take Action: Pay Down Debt Goal: no more than 30% credit utilization on open debt Deal with Debt Take Action: Pay Down Debt

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Collections have most significant negative impact on a score when first reported … then they age. Removing a collection account (i.e. medical collection) will improve the score! If it is not theirs – dispute it! Paying off a collection account still leaves negative account info on report until it ages off (do not confuse with state debt collection statute of limitations) Paying off a collection account can have a NEGATIVE impact if it makes Date of Last Activity more recent. Settle rather than create payment plans if possible. Collection activity and collection agents cannot update the Date of First Delinquency! Deal with Debt: Take Action: Collections 101

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Deal with Debt: Debt Management Companies Can’t legally do anything you can do for free Can’t legally collect fee before delivering the promised service Can’t legally advise you to lie about your accounts or about your identifying information

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Deal with Debt Peer Learning What are the youth’s goals? How can we encourage/support youth to manage debt wisely?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Consider the Goal Know the Score Get the Good Stuff Going Deal with Debt CBA Credit-Builder 5-Step©

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. CBA Credit-Builder 5-Step© Leverage Success Help youth leverage improved credit in order to achieve ACCESS, build ASSETS, and increase SAVINGS!

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Tracking credit outcomes can help: Empower youth Catch problems early & course correct if necessary Identify new opportunities & threats Effectively communicate impact Leverage Success Tracking Outcomes

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Can you answer these questions?: How much? = outputs How well? = outcomes What difference did it make? = impact Leverage Success Tracking Outcomes

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. NEFE Impact Hierarchy Financial behavior change can be measured by indicators found on a youth’s credit report Leverage Success Tracking Outcomes How well What difference?

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. On-time payments = positive financial behavior Active trade lines with mainstream financial institutions = financial inclusion Debt to Credit Ratio / Debt reduction = financial stability Types of credit products = asset building # Inquiries = financial need Tracking Outcomes Selecting Indicators Behavior Change Indicators

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. The most impactful measurement used by mainstream financial institutions to offer them mainstream credit. Tracking Outcomes Selecting Indicators Using Credit Score to Track Client Progress

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Tracking Outcomes: Selecting Indicators Using Credit Score to Track Client Progress Considerations Which score are you using? Proprietary concerns with sharing score data (consult your legal advisor) Tracking score change based on score at intake and in subgroups

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Tracking Outcomes: Selecting Indicators Using Credit Score to Track Client Progress Downsides of using credit score as sole measure of success: Score change isn’t always accurate measure of consumer creditworthiness Increased credit score doesn’t mean participants will or understand how to use traditional credit products

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. The Process Define the purpose and focus of your outcome tracking Define program objectives & select indicators Develop a plan covering data collection, management, use, and communication Share and Celebrate Youth Success! Leverage Success Tracking Outcomes

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Leverage Success ACTIVITY Established credit history and improved scores Access to affordable financial products, housing, and employment opportunities Increased savings and financial stability

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. RECAP CBA Credit is an Asset Training Credit is ubiquitous Think about it as an asset to build and not just a barrier Focus on underlying consumer behavior (not just score) as reflected on credit reports and the rest will follow Take the credit building approach over the debt management approach if possible: 3 active accounts (ideally a mix of product types) On-time payments Paying off collections alone is not credit building Offer clients a pathway for building and leveraging good credit

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. 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. Introduction: CBA’s Advantage

www.creditbuildersalliance.org info@creditbuildersalliance.org© 2013 Credit Builders Alliance, Inc. Some rights reserved. Sarah Chenven 202-888-7585 sarah@creditbuildersalliance.org Feel free to get in touch if you’re interested in learning about additional training opportunities or services Thank You!!!

2013 Credit Builders Alliance, Inc. Some rights reserved. © 2013 Credit Builders Alliance,

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