Expanded partnership will help underrepresented populations build their credit history and financial futures
More than one billion people around the world today are considered “credit invisible” or “credit disadvantaged,” unable to access financial products and services because they have little or no credit. As a global information and insights company committed to financial inclusion, TransUnion is announcing a $400,000 donation to Credit Builders Alliance (CBA) to help underrepresented consumers in the United States build credit — a prerequisite to participating in the mainstream financial system.
“TransUnion’s commitments to financial inclusion and racial equity go hand in hand,” said Chris Cartwright, president and CEO, TransUnion. “We must create opportunity for members of the Black community — and other underrepresented communities — to succeed. Access to safe and affordable financial products helps consumers build their credit health and take control of their financial futures.”
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Credit Builders Alliance is a nonprofit dedicated to building the capability of a diverse and growing network of partner nonprofits and the consumers they serve, who are predominantly low to modest income. The organization serves as a bridge between the credit reporting system and its nonprofit lender members. The goal is to help borrowers with poor or no credit eventually participate in the mainstream financial system through building positive credit. The organization’s Community Development Financial Institution (CDFI) intermediary, CBA Fund, plays an important role in growing the capacity of nonprofit lenders to offer small dollar, credit-building consumer loans.
Through CBA Fund, TransUnion will provide capital to select organizations that serve a predominantly Black client base. Studies show that poor credit health disproportionately affects the Black community, as nearly half (45%) of Black Americans have subprime credit scores, compared to about one third (31.5%) Hispanic consumers and 18.3% white consumers, according to a recent Urban Institute study. Targeted loans from participating nonprofit lenders will provide an opportunity for these consumers to gain access to financial opportunities, while building credit through loan repayment.
The partnership will also fund scholarships to support Credit Builders Alliance’s efforts to assist CDFIs and other small dollar nonprofit lenders in becoming data furnishers. Many of these organizations lack the resources necessary to onboard and share data with credit bureaus. Through the assistance of scholarship funds, organizations can report the repayment of small dollar loans, providing a more robust credit file. Small dollar loan repayments, along with other forms of alternative financial data (such as rental payments and utility, telecom and cable bills), provide a more accurate picture of an individual, and create greater opportunity to participate in the financial mainstream.
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“TransUnion was the first credit bureau to partner with CBA to expand access to credit reports for financial coaches supporting low-income communities 13 years ago,” said Dara Duguay, Chief Executive Officer, Credit Builders Alliance. “We’re incredibly grateful for the opportunity to deepen and evolve our relationship. With a shared commitment to financial inclusion, our partnership will have a tangible impact on the communities most in need.”
TransUnion is a leader in the growing movement to include more alternative financial data in the consumer reporting ecosystem — using alternative and trended credit data to help over 35 million previously unscorable consumers gain greater access to credit. This donation builds on contributions made earlier in 2021 to produce educational toolkits as part of Credit Builders Alliance’s Rent Reporting Technical Assistance Center. TransUnion research shows that when rental payments are included in a consumer’s credit file as a form of alternative financial data, consumers experienced an average increase of nearly 60 points to their credit score. The consumer population who generally has the least access to favorable terms for financial goods and services, the unscorable and subprime consumer cohorts, stand to gain the most with the largest credit score growth.
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