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What does your credit box look like?

first_imgCredit is a subject that credit unions find incredibly familiar. It is the driver of everything we do, from our profit to our promotions to our processes. We understand what type of credit risk we want to take in our loan portfolio, we think about how we want to attract those borrowers that fit our preferred profile, and we chase credit recovery through collections efforts when our borrowers fail to repay. We know exactly what the extension of credit means for our institution. In a financial institution, a credit score is simply more numbers that are part of a larger calculation. However, I wonder how often we think about what credit means for the average, every day people we serve. Most of our members are not as familiar with credit scoring models as we are, and many do not watch their credit closely as a measure of their financial health. Credit may be the component of the 5 ‘C’s’ of credit that we may potentially take too seriously. We need to be willing to have a fuller understanding of what makes up an individual applicant’s credit score, and not just because we want higher loan yield or need to grow our portfolio.  It is often easy to make a moral judgment about an individual based on their credit score. Credit scores tell stories. Good credit scores are stories of responsibility, of opportunity, and in some cases, of privilege. Some members are fortunate to have good credit because they have strong social ties willing to lend a hand in time of need, allowing them to keep their credit score pristine in times of challenge. Other credit scores tell stories of divorce, of disappointment, and of heartache. These stories are stories of an abrupt layoff, of an unexpected cancer diagnosis or car accident, or other unanticipated tragedy. Still others tell stories of lack of access – of neighborhoods populated with subprime lenders at ‘buy-here-pay-here’ car lots, check cashers and payday lenders. These credit scores may tell stories with deep histories. The numbers on paper cannot reflect the distrust in financial institutions behind the scores. An absent credit score may not fully tell the story of the member whose parent was redlined by a local bank, or how a family lost everything as a neighborhood declined around their property.  The number on paper doesn’t reflect the challenges to access faced by that family, leading them to be un-banked or underbanked a generation or two later. A lack of credit score can reflect a history in a country with an unstable financial system. A lack of credit score can reflect a language barrier or unfamiliarity with the United States financial system. This lack of score can lead to lost housing opportunity, further perpetuating the cycle of spotty borrowing.  Character is important. As a safe and sound institution, we want borrowers who will repay.  This is not an article about lending to underserved communities, risk management or credit policies. Your own balance sheet and strategic plan will determine what that means for your institution. Still, credit has implications and has a legacy. In the United States, it has been used to create opportunity for some and has been a barrier to access for others. My institution, North Side Community Federal Credit Union, is one of a very small handful of credit unions in the country that operates a housing counseling agency. As part of our services, some of our staff meets with individuals for a lengthy two-hour credit counseling session. We see a wide range of stories. Yes, some have destroyed their credit with irresponsible financial management. Those stories come from all walks of life. Many more have never learned about credit or had an event beyond their control that rendered them unable to responsibly repay their debt. The one thing they all have in common is a desire to improve their credit, understanding it will improve their financial situation. As cooperatives, we have a unique opportunity to look beyond just the scores we see on paper. We have an opportunity to use credit to help people improve their lives and provide access to greater opportunity. This will look different based on each individual field of membership, but the balance sheets are not our primary mission. The balance sheet is simply the method by which we accomplish our mission.  Recently, the CEO of a CDFI credit union shared how excited she was to offer an ITIN product. An outside observer commented to her that what her credit union was truly doing was offering hope to people. Hope is a rare commodity.  If credit unions can offer that to people through the way we transact we can offer a unique value proposition that will be difficult for any other financial services provider to compete on. 49SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr,Sarah Marshall Sarah Marshall is a consultant in the credit union industry, and can be reached for partnership and speaking opportunities through Your Credit Union Partner. Her background in community development includes … Web: https://yourcupartner.org Detailslast_img read more

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KPK highlights inefficiency, mismanagement in preemployment card program

first_imgKPK commissioner Alexander Marwata said the Manpower Ministry and the Workers Social Security Agency (BPJS Ketenagakerjaan) had created a list of 1.7 million workers who were laid off during the outbreak. The commission further found that only around 143,000 of them were accepted in the preemployment card program.Read also: Preemployment card may not help people return to work despite ‘new normal’: ExpertsKPK’s deputy for corruption prevention, Pahala Nainggolan, said some of the targeted individuals were senior citizens who were not proficient in using the internet. Meanwhile, registration could only be done online.The commission suggested that authorities contact laid-off workers listed by the Manpower Ministry and the BPJS Ketenagakerjaan by telephone first, as they were the main target of the program.Alexander also questioned the Rp 30.8 billion allocated for facial recognition technology to verify participants’ identities. He recommended that the government verify identities by cross-checking participants’ citizen identification numbers with the Home Ministry’s Population and Civil Registration rather than procure new technologies for such matters.Potential loopholesAlexander highlighted loopholes in the program as it had no control mechanism to check whether participants had really attended and finished courses.“Training institutions have already issued certificates for participants, even they may not have finished all their course packages yet,” Alexander said.Participants will also receive monthly cash assistance of Rp 600,000, regardless of whether they participated in any courses at all, potentially wasting Rp 1 million allocated for the courses.The KPK urged the government to establish a control mechanism to guarantee that participants took and finished their courses, such as by implementing interactive learning methods.Read also: Roughly 110,000 complete preemployment card courses, entitling them to cash assistancePoor courses curationThe antigraft body found after studying the list with the Indonesian Training Institute Association and the Manpower Ministry that only around 250 of 1,895 offered courses fulfilled the standards for online training.Pahala said some courses taught basic skills that did not require a class at all or necessitate face-to-face training sessions.In the study, the KPK also found that 89 percent of 327 random-picked courses were already offered free courses on other learning platforms such as prakerja.org, which was established to challenge the preemployment card program.Alexander urged the government to take out courses from the program that are being offered for free on other platforms, as well as invite more competent parties to help curate the course.Conflict of interestThe program could also present a conflict of interest, as the antigraft body found that online education platforms distributing the courses were also the ones producing the classes.For example, online education platform Pintaria offered 199 courses for preemployment card holders, 69 of which were produced by HarukaEdu, the company that owns the platform.Similarly, 117 of 277 courses offered in Ruangguru platform are also made by its subsidiary Skill Academy.“We found at least 250 problematic courses with a potential conflict of interest,” Pahala said. “It shouldn’t be like this because it weakens the curation.”Read also: ‘Preemployment card ineffective, gimmicky’, CEO participant claimsMoreover, the government picked the eight partnering companies without a proper mechanism for procuring goods and services..The KPK urged the government to remove the 250 courses that potentially have a conflict of interest. The government should also ask the legal opinion of the Attorney General’s Office regarding the procurement mechanism.Alexander said the antigraft body had handed over its recommendations to the Office of Coordinating Economic Minister and other related ministries in late-May. The KPK noted that the government had made some improvements on the program based on its suggestions, including postponing the fourth batch of new registrations.The Office of the Coordinating Economic Minister also said it would provide more offline courses after the outbreak had subsided, Pahala went on to say.Topics : Each recipient can also receive Rp 1 million to pay for various up-skilling courses, ranging from marketing to fishing.Though the KPK approved of the redesign, it also found some issues related to its management and courses offered.Missing targetSince the first batch of online registrations in April, around 680,000 individuals have been accepted to the preemployment card program as of May, out of a total of 9.4 million applicants. The Corruption Eradication Commission (KPK) has found in a recent study several irregularities with the management and digital courses offered by the government’s preemployment card program.The program was initially designed as a training program to equip the unemployed and fresh graduates with new skills that would help them enter the job market. However, it was later repurposed as a combination of cash aid and training subsidy following massive layoffs across the country during the COVID-19 pandemic.President Joko “Jokowi” Widodo’s administration allocated Rp 20 trillion (US$1.4 million) to be disbursed for 5.6 million participants who will receive Rp 600,000 monthly for four months and Rp 150,000 after filling out the program’s survey.last_img read more

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