Microfinance Through the Eyes of an Intern, or What I Learned at CGF this Summer
Authored by Julie Siwicki
For one: credit reports are complicated. As a summer intern, one of my first tasks involved finding resources about building credit. CGF staff planned to study them, internalize them, and then begin providing credit counseling to our borrowers. With the help of an asset-building organization in St. Louis, MO, Justine Petersen, LLC, CGF received several trainings in reading credit reports. We learned a lot – like how long it takes for a bad line of credit to fall off your score, and why starting a new line can be better than paying off old debt. I was baffled by the amount of information each sample report contained. The trainings made me feel much more confident about my personal finances, and I realized that Providence’s low-income residents stand to benefit from them markedly more than I did.
#2: Providence is full of forward-thinking individuals who want to educate themselves and improve their quality of life. I attended our inaugural borrower meeting and regular focus groups, thrilled to engage face-to-face with CGF’s raison d’être. When asked what auxiliary services they’d like to see from us (aside from the loans themselves), borrowers prioritized education about America’s credit system. Understandably so! Their stories convinced me that CGF is reaching the right people, and successfully meeting their needs.
Finally: Microfinance is effective. Credit is a requirement for financial success in the US – not only for big businesses making big investments and middle-class homeowners, but for start-up entrepreneurs and families living from paycheck to paycheck. Yet I’ve found that commercial banks often deny the tool of credit to low-income community members who need small loans. Bankers are unimpressed by the sum of interest repayments that would come in, or worried about the risk of default posed by lower-income borrowers. Stronger credit reports are a guaranteed way to improve their chances of getting a loan, but very few people understand the value of a good credit score or how they could improve theirs (see lesson #1 above!). In Providence, CGF has stepped in to assure this community that they are credit-worthy. As a result of its services, one borrower, Nina, has created a profitable daycare center while another, Eva, has been able to become a U.S. citizen. This summer, CGF has impressed me with the active steps it takes to educate its constituents about the complicated world of credit, and with the great progress it’s made along the way.
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