Credit creation solutions for those who need them most

Whether we like it or not, credit scores play an important role in our daily lives.

From loan decisions to everything, from car insurance and payments to cell phone bills and rents, a bad credit situation can have a detrimental effect on a person’s ability to make ends meet.

Here’s why First Fed has many new options for creating credit points for people with low to no credit scores.

“As a community bank, our position is to support people’s access to financial products and their ability to participate fully in our economy,” said Christine Walsh Rogers, First Fed’s chief product strategist.

About 15% to 17% of Whatcom County residents are not serviced by banking institutions in any way, according to a First Fed survey.

“There is a need for the community to help with this,” says Walsh Rogers. “These small programs can really help empower someone in their financial career.”

Compass Account

One of First Fed’s financial solutions is Compass Accountan entry-level audit account certified according to its state and federal standards I am counting on– a program designed to provide banking access to non-banking and sub-banking individuals in the American communities.

Many who do not have access to bank accounts are forced to rely on aggressive pay-day loan services instead, so access to a bank account and accompanying debit card is a great help to their financial situation.

The Compass account is not overdraftable, there are no charges for insufficient funds and only a monthly maintenance fee of $ 5. You do not need a valid driving license to open a Compass account, nor a Social Security number or permanent address, as long as you have a verifiable postal address, such as an employer or social services organization.

This makes it an excellent type of account for those with non-traditional forms of identification. Any form of government-approved ID, state or federal, is acceptable, including racial membership cards, IDs from other countries, and education-based IDs.

The Compass Account provides a debit card for financial transactions. Photo courtesy of First Fed

Credit Builder Loans

The second option, the Credit Builder A loan program allows one to take out a small loan by investing in a Certificate of Deposit (CD), repaying it over time as a means of generating credit, while developing a savings discipline.

“Someone who has no credit or money can come and get it, as long as they are qualified to make a monthly payment for it,” says Walsh Rogers. “The goal is to build their credit by repaying the loan, while this certificate of deposit secures the loan.”

While loan payments are designed to be a manageable monthly amount, if a person is unable to make a monthly payment at any time while repaying the loan, they can work with First Fed to redeem the CD at that point. , says Walsh Rogers. Anything they have paid for this loan is then considered equity on CD.

For example, Walsh Rogers says a recent client spent eight months on the program before having to repay his loan. Once the loan was repaid, they had access to the amount paid on the CD plus the interest that this amount had generated.

Even if you repay the loan earlier, your credit will not be adversely affected and in most cases it will have improved. The design of the program itself is to create a low risk way for people to build and improve their credit scores.

The only real cancellation exception to participating in the Credit Builder program is the commitment, such as taxes or enforcing child support. “They can not have the kind of pledge that would take precedence and could deduct funds from the certificate of deposit,” says Walsh Rogers.

A better future

There are many examples of the benefits of providing bank accounts to marginalized people.

Recently, Walsh Rogers heard the story of a man who was recently released from prison. Due to the fact that most landlords needed some kind of credit to secure a rent, the man was at a loss. But when he finally found an landlord who told him the proof that a bank account would do, he opened a bank account and secured a rent.

A permanent address can often lead to a person’s next step in financial and personal well-being. Building on credit can also help them pay less for insurance or credit card, helping them gain the financial discipline that can one day lead to owning a home or vehicle.

“This kind of stability – knowing the homeless crisis our community is facing – makes us all better,” he says. “We want to get them all up.”

First Fed is an equal home lender and FDIC member


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