Mission, Philosophy, and Purpose
Credit Builders Alliance (CBA) is an innovative non-profit social enterprise dedicated to building the capacity of a diverse and growing network of hundreds of nonprofits (CBA members) in almost all 50 states, including Puerto Rico, that help low- and moderate- income households build strong credit and other financial assets. CBA was created by and for our nonprofit members in response to a serious gap in the modern credit reporting system that locks millions of individuals with poor or no credit out of the mainstream financial system without opportunities to build credit. Our philosophy is that good credit is essential to achieving and maintaining financial stability, and that mission driven nonprofits are uniquely positioned to help these struggling households build credit as an asset.
CBA serves as a unique and vital bridge between our members and the major credit reporting agencies (CRAs). Our core services, CBA Reporter and CBA Access, provide nonprofits with both the ability and critical technical assistance to report loan data to the CRAs and to pull low-cost client credit reports for the purposes of financial education, outcome tracking, and underwriting. In addition to these core services — which are essential to helping individuals and families build credit histories and scores — CBA offers practitioners hands-on credit building trainings, innovative tools, and forums for sharing with and learning from each other.
Our membership is comprised of nonprofit Community Development Financial Institution (CDFI) loan funds, microenterprise development organizations (MDOs), and small credit unions as well as multiservice/integrated services organizations such as community action agencies, affordable housing organizations, Local Initiatives Support Corporation (LISC) Economic Opportunity Centers, and local Catholic Charities and United Way affiliates, among others. Through our members, CBA services touch an estimated hundreds of thousands of clients in urban, suburban, rural, and tribal areas through programming tailored to the specific needs and assets of different populations in their local communities. In order to ensure its efforts remain grounded in the work members do every day, 50% of CBA’s Board seats are held by practitioners in the credit building field.
Strengthening Members’ Organizational Effectiveness
Every CBA service, program, and task is performed in pursuit of one unified objective; to increase the capacity of nonprofit organizations to effectively support their low- and moderate-income clients in building credit as an asset. CBA’s Reporter service currently provides small nonprofit lenders with the only opportunity to report their loans to the major credit bureaus. This enables them to offer their clients not only a loan to start a business or meet a household need, but the ability to build positive credit history. According to a 2013 survey of our membership, over 90% of respondents utilizing CBA Reporter agreed that reporting loan data to the credit bureaus through CBA:
- Is best practice in the field
- Increases their clients’ access to safe and affordable mainstream credit products
- Improves the quality of their loan portfolio — decreasing delinquency rates — by providing clients with a positive incentive to make their payments on-time
CBA’s Access service offers nonprofit organizations engaged in lending and/or financial education with the ability to pull credit reports in order to underwrite loans, coach clients, and track client and program outcomes. According to our survey over 95% of respondents utilizing CBA Access agreed that access to client credit reports under CBA’s umbrella:
- Is a valuable tool for staff to better understand and address their clients individual credit profiles, challenges, and opportunities
- Is critical to their work helping clients build credit and other financial assets and incentivizes program participation
- Greatly improves their ability to measure client credit and financial progress over time
CBA also provides members with hundreds of hours of technical assistance (TA) and training every year. Our reservoir of institutional knowledge of and support for our members increases their organizational resiliency and sustainability. This TA and training helps members achieve operational and programmatic continuity, particularly in an industry with substantial staff turnover. It includes but is not limited to building their capacity to:
- Use specialized software to accurately report borrower repayments each month
- Efficiently investigate and resolve consumer disputes
- Interpret credit reports
- Comply with the Fair Credit Reporting Act and other federal regulations
- Measure client, program, and organizational outcomes
Building the Field and Changing the System
At its inception, CBA’s one-of-a-kind umbrella partnerships with the CRAs created national systems change, enabling nonprofit lenders, financial educators, and asset builders to help tens of thousands of low- and moderate-income individuals and families in underserved communities across the country build credit. “We stand on the shoulders of CBA”, notes one of our members, Mission Asset Fund, whose work has been showcased as a national model for helping households build credit and other financial assets.
Today CBA’s network of members report tens of thousands of loan trade lines — totaling over millions of dollars in credit (see the most updated figures on our home page “CBA By the Numbers” feature!) extended to low- and moderate-income households – and pull over thousands of credit reports for credit coaching, outcome tracking and underwriting every month. Through these credit building efforts members report that on average their clients without scores achieve a prime score — and those with low scores increase their scores by between 15 and 100 points — within 6 to 12 months.
CBA intentionally leverages its position as a unique link between nonprofit credit builders and major industry players such as the CRAs, state and national partner network associations (including the Aspen Institute, Association for Enterprise Opportunities (AEO), Accion, Corporation for Enterprise Development (CFED), the Center for Financial Services Innovation (CFSI), Opportunity Finance Network (OFN), and the Corporation for Economic Development (CFED), etc.), and federal policy makers (including the Consumer Financial Protection Bureau (CFPB), Federal Reserve Banks, and the U.S. Department of Treasury) in order to continue to test and share innovative ideas and support the development of a more inclusive and just credit system. This includes a number of strategic initiatives such as:
- Collaborating with Experian, the first and only of the three big CRAs to allow rental payments to be reported on consumers’ credit reports, and nonprofit affordable housing organizations to help report the rental payments of low-income tenants living in subsidized housing, impossible prior to CBA’s efforts.
- Supporting productive dialogue among state and local child welfare agencies, the CFPB, and the U.S. Department of Health and Human Services, to promote greater efficiencies for implementing an unfunded federal mandate to requiring child welfare agencies to pull and interpret credit reports for all youth in foster care once they turn 16 in order to give them a fighting financial chance as they transition into adulthood.
- Working with national think tanks such as CFSI, OFN, AEO, and CFED to identify and share best practices in small-dollar, anti-payday loan,and small business lending within and among nonprofits, for-profit retail lenders, traditional financial institutions, and regulators.
- Identifying barriers and educating nonprofit practitioners and traditional financial institution staff on banking the unbanked and understanding ChexSystems.
- Monitoring the growing alternative credit industry to distinguish credible and responsible opportunities for households working to transition from poverty to prosperity.
CBA’s direct work with hundreds of small community-based nonprofit organizations serving individuals disadvantaged by the current finical system makes it the well informed, grounded, and effective advocate for the development of a more inclusive and just financial system that it is.
Developing with our Members, Meeting Challenges, and Seizing Opportunities
CBA prides itself on its demonstrated ability to recognize and respond to the changing needs and assets of its members. As the needs and interests of its members have evolved CBA has created several new services and resources, leveraging its existing core competencies and unique relationships. For example, building on its successful CBA Reporter service established in 2007, CBA created its Access service in 2009 in partnership with TransUnion in response to members’ need to pull credit reports in order to improve their credit coaching, program development, underwriting, and program evaluation. In 2011 we also added CBA Business Reporter, a partnership with Experian Business and Dun and Bradstreet in response to members’ desire to support their small business owner borrowers in establishing and building their businesses’ credit in addition to their own consumer credit. This summer, CBA responded to the expansion of its membership by redeveloping its popular Credit as an Asset training to make it more practical and relevant not only to nonprofit lenders and financial coaches, but to social service and housing providers that are finding themselves on the front line in working with individuals around credit building more than ever before. All of these initiatives have met with resounding success over the years, as is evidenced by CBA’s growing and diversifying membership from less than a dozen nonprofit lenders at inception to over 400 nonprofit organizations today including lenders and financial coaches as well as asset builders, social service agencies, housing providers, and others.
As credit reports and scores are being used more widely and often — impacting what individuals pay for cell phones, insurance, and utilities as well as their housing and employment options — nonprofits with myriad missions are recognizing the connection between their clients’ credit profiles and the opportunities available to them. And CBA is thrilled that the credit building message has spread so widely and quickly and also for the opportunity to support its new members in incorporating credit building into their programming.