New Research on Credit Building Featured at Underbanked Forum
By Kate Marshall Dole, Analyst, Innovation & Research
Today, CFSI releases new research that suggests to banks and credit unions a number of ways in which they can support credit building for low and moderate consumers in the U.S. High-quality credit instruments are a critical financial building block for American families, but many people can’t access high-quality forms of credit because of a damaged or limited credit history. Banks and credit unions are uniquely positioned to help consumers build their credit scores – and yet most financial institutions aren’t doing as much as they could be to facilitate increased access to high-quality credit for these consumers.
CFSI’s new research paper highlights initiatives that can be undertaken in the short-term, medium-term and longer-term.
- Short-term: Credit Building Tools, Services and Partnerships. Credit building tools and services, such as online and mobile-enabled credit score tracking programs, may be developed in-house or offered through referrals. Financial institutions can also form partnerships with non profits that provide high-touch products and services.
- Medium-term: Risk-Limited, Credit Building Products. Financial institutions should consider developing risk-limited, credit-building products and promoting them so that customers for whom they are relevant know about and can access them.
- Longer-term: Go Beyond Traditional Credit Files. Over a longer time frame, banks and credit unions should work to incorporate new and deeper sources of data into the credit decisioning process, potentially making high-quality forms of credit more accessible to thin and no file consumers.
This research, which has been sponsored by Citi Community Development, will be featured later today at CFSI’s 7th annual Underbanked Financial Services Forum in a session entitled “Empowering Consumers, Empowering Lenders: Shifts in Consumer Credit Decisioning.” CFSI Board Member and Global Director of Citi Microfinance and Community Development Bob Annibale will discuss the research and how it applies to the work Citi is doing to help build consumer credit.
