Helping low-income Americans build credit

Though familiar to millions of people around the globe, informal lending circles among families, acquaintances, co-workers, and neighbors are rarely recognized by mainstream financial institutions. But with support from a diverse coalition that includes major banks, immigrant activists, academic researchers, and philanthropies (including Ford), these networks are increasingly being seen as a promising way to help low-income Americans build credit records. In a recent New York Times article, Amy Brown, the foundation’s program officer for financial justice, explained that this matters because lacking a credit history can make it very hard to be a part of the economic mainstream: “Over time, it makes it really hard to build wealth and move up.”

Published in the New York Times | October 10, 2014
In lending circles, a roundabout way to a higher credit score
By Patricia Cohen


Shweta Kohli has always paid her own way. Her straight-A average won her a full scholarship to San Francisco State University at the same time she worked a 40-hour week as a waitress at a cafe. But when she applied for a credit card after graduation, she was turned down because she had no credit history.

So three years ago, Ms. Kohli, now 34, joined a lending circle—a small group of people who chip in every month to lend money to one another at no interest. Managed by the Mission Asset Fund, a nonprofit group in San Francisco that works with credit-rating agencies, the circle offered Ms. Kohli something no bank would: a chunk of cash and a chance to build a credit score.

After faithfully making payments—and socking away enough to buy a 1997 Ford Mustang—she raised her credit score from zero to 789 in 26 months. Ms. Kohli, ever the striver, said: “My goal is to keep it at 850, the highest.”

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The Ford Foundation is an independent, nonprofit grant-making organization. For more than 80 years it has worked with courageous people on the frontlines of social change worldwide, guided by its mission to strengthen democratic values, reduce poverty and injustice, promote international cooperation, and advance human achievement. With headquarters in New York, the foundation has offices in Latin America, Africa, the Middle East, and Asia.