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Dear Colleagues -
sometime last year I posed a problem on this listserve that many of you were also experiencing: the difficulty of reporting credit experiences for "good payers" to the credit reporting agencies. I noted that one of the goals of our micro lending program was to help our borrowers build or repair their credit histories and that we had been thwarted in making them more "bankable" because the credit reporting agencies would only take "good" reports in large batches (100 - 300). Our small portfolio is unable to produce reports at that volume and so we are not able to provide our clients with the full benefit of borrowing. Many of you stated that you shared that problem.
There may be a solution developing. There is an organization in Baltimore called "Pay Rent, Build Credit" (www.prbc.org) that is trying to set up an alternative credit reporting system. Their point of view is that for many credit worthy low income persons who don't have a mortgage, a car loan, or use credit cards the problem is not so much a blemished credit report as an anemic one - just not enough information in it to establish repayment patterns. They may regularly pay their rent, utilities, phone, cable, their loans from us, etc. but since our whole credit system is based on voluntary reporting by creditors, this information is not collected. Thus, they both literally and figuratively receive no credit for their behavior.
The prbc model may provide some assistance. They will allow micro lenders to report their lending experiences in to them. It is a new program and not widely used at this point but progress is being made, it seems. Apparently there is some agreement with Citibank to use the information prbc collects.
I encourage you to take a look at their website and see if this could help your clients. The obvious answer is that the more of us who participate with them, the more established this program will become and the more benefit it will have for our clients. The difficulty is waiting until the program has sufficient scale to matter to anyone.
At present, it may be the best of a bad situation.
Good luck -
Westchester Housing Fund
14 Saw Mill River Road, Suite 3
Hawthorne, NY 10532
914.592.3244 x 12
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