Empowering individuals to establish or re-establish good credit is a key part of asset building and achieving financial inclusion. In today's economy, establishing a positive credit history often opens the door to lower cost and wider choice as well as to appropriate financial services that can contribute to building assets such as a home or small business. Good credit also enables people to manage emergencies; avoid alternative financial services; and build financial capability.
Credit Builders Alliance, the leading specialized organization in the sector, notes that families with good credit can save approximately $250,000 in interest throughout their working lives. A car buyer, for example, could save up to $50 a month in interest on a 36-month car loan.
Individuals with 'thin files' who strive to formally establish a positive credit history and others who may have faced challenging times and are working to rebuild their credit history can receive valuable support from organizations that combine financial coaching with access to innovative credit building tools.
The Chicago Credit Building Coalition (CCBC), a partnership among dedicated community organizations in Chicago and Citi that was launched on July 22, will build on our collective commitment to financial inclusion by providing individuals who are committed to building their financial capability with coaching combined with access. The Banamex USA credit card that will complement the CCBC members' existing financial education and coaching programs is a useful tool for individuals to strengthen their credit histories, as outlined in the press release from the launch, since on-time payments and other positive financial histories and behaviors can significantly raise a person's credit profile.
The card is also an important financial tool for dealing with emergencies and accessing more competitively-priced services, such as cell phone and web contracts that empower individuals with choice and convenience. Imagine the higher cost of not being able to purchase the lowest-fare airline ticket online, or trying to rent a car or book a hotel with only cash.
The success of the CCBC can make it a model to replicate in other markets. The members of the Coalition 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.