1. Define Organizational Mission
When designing a new credit builder product, think first about the mission and goals of your organization as well as the need of your community. Non-profit lenders are able to offer loans that are tied to their wealth building and economic development mission. What is your organization's motivation or interest for offering a credit builder product? Ensuring that the product you choose clearly fits your mission-related work will help you get buy in from you board and colleagues and also stay true to your non-profit status.
2. Define Target Audience
Once you know how the product will meet your mission, the next step is to define the specific target market for the product.
- Is there a credit builder product that can help you serve your current client base better?
- Will a credit builder loan help you to attract new community members to your offices?
- Is there a well-documented existing need for a credit builder product in your community?
- Do you need to conduct a needs assessment to help you define community need and demand?
3. Assess Need of Target Audience
Once you have defined your target audience, take some time to think more specifically of their need and demand. Do you wish to offer a product to your IDA savers? Entrepreneurs? Students? Workforce development clients? Homebuyers? Help community members get out of debt? CBA's Credit Profile Survey Tool can help you assess the credit needs of your clients and community.
4. Define Product that Meets Need
What kind of credit builder product does your target market need and demand?
- Do homebuyers need a very small loan to help them build credit without debt? Will they need this loan to be active for more than 6 months? Will this product be a transition to a secured credit card?
- Do entrepreneurs need a $2,500 loan to help build business capital or pay off personal debt while building credit towards a larger loan?
- Do consumers need $3,000 to pay off payday lenders and other high cost credit and free themselves of a spiraling debt trap?
- Do IDA savers want a product that helps them build savings and credit?
5. Evaluate Capacity and Partnerships
Are you an organization that can offer small loans directly to your clients?
- What credit limits and underwriting policies does your organization currently use?
- How would a credit builder product require you to update and re-evaluate your current lending?
- What additional requirements or criteria can help you ensure that both your clients and your organization benefit for a new product?
Do you have a partnership with a bank or credit union who can offer a special product to your clients?
- What credit builder products do local banks or credit unions offer?
- What are their requirements for underwriting these products? Can you work with your partner to create a streamlined underwriting - or even an online process to offer products to all your clients.
- Is it possible to create secured lines of credit against your clients IDA or savings account?
- Can you offer an unsecured credit card based on established alternative credit history?
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Remember, helping your bank partners build a credit relationship with new customers is a win-win situation.
What other community partners can help you build credit in the community?
- Are there local employers who would appreciate referring clients to a credit builder loan than offering a salary advance?
- Could homeownership counseling centers extend credit building services to microentrepreneurs or IDA clients more generally?
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