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News #4

Welcome to the latest Connecticut Asset Building Collaborative newsletter! Read on to find out more about the latest research, opportunities to learn, and news that you can use in your own work.

Local opportunities to learn

Peer learning event

Want to learn more about the current status of financial coaching in Connecticut? If you or your organization do financial coaching, complete the survey here. Then come along to the next CT Asset Building Collaborative peer learning event to discuss the results and network with your peers! Register here for the event, which will be held on December 7th, from 1:00-3:30pm in the Hubbard Room at the Russell Library in Middletown, CT.

Celebrate Connecticut Saves Week February 27th to March 4th, 2017!

The Connecticut Saves Campaign in cooperation with the America Saves Campaign led by Consumer Federation of America is planning several special events and financial education workshops focused on encouraging families to save for their financial goals in celebration of “Saves Week”. Learn more here! For more information, including about opportunities to partner with community agencies and organizations to highlight savings-related education and opportunities for families, contact Faye Griffiths-Smith at 203.407.3160 or faye.griffiths-smith@uconn.edu.

The latest research that matters

Poor people can and do save – but not for the long term

Most of us know this already, but it’s worth a reminder that low income people can and do save, regularly, as this research (by the Financial Diaries project, promoted here by Shelterforce) shows. However, for the most part they save only for short term needs, such as periods of income loss, emergencies, or occasional larger than normal expenses.  Low and irregular incomes make it very difficult for many people to save for the long term. But, see here for some ideas for how to help low income families develop longer-term savings strategies.

Changing the way we score credit risk…. if only

Also from Shelterforce, see this great article, challenging the way that credit scores are calculated. When for so many people, paying rent is one of the best indicators of their reliability to pay, why aren’t rent payments included in credit reports? Research finds that young people who’ve piggybacked on their parents’ credit history have a great score, while those who’ve never used credit, but pay their rent on time and have a savings account, have low scores. The article also discusses the point that while in theory a standardized score avoids the (racial) bias of individual loan officers, in practice the scores have ‘discriminatory modeling assumptions’. Also take a look at this article from the Urban Institute, showing how many Americans are still suffering from poor credit related to the financial crisis, which may be hindering overall economic recovery.

Hints of a problem to come?

There are worrying signs that the ever-growing auto loan market may be in trouble. Research shows that borrowers with subprime credit scores (below 620) are struggling to repay their loans, with potential negative consequences both for that market, and for those borrowers. Stay tuned, and pay attention to people you work with who may be at risk of losing their means of transportation.

News you can use

New rules for prepaid cards

In early October the Consumer Financial Protection Bureau instituted new rules for prepaid cards, ensuring that consumers are properly informed about the fees and can compare cards, and providing protections in case of errors, loss, or theft. See here for an article on the subject.

Goldman Sachs for the masses?

The personal loan market is changing, and changing fast. Having long served those with fortunes most of us can only dream of, Goldman Sachs is coming down in the world, entering the personal loan market for consumers who are only barely above subprime. The new 'Marcus' product offers personal loans with rates as low as 5.99% APR, giving people the opportunity to get out from under high interest credit card debt (though rates vary depending on a person’s credit risk and the length of the loan). Might be worth a look! Also take a look at this news that the founder of the Lending Club, the first major player in the online personal loan market, is coming back from a scandal-filled departure from Lending Club to start up another online lending business, which will be known as Credify.

New Haven financial empowerment takes off

Working quietly behind the scenes, the New Haven Mayoral Financial Empowerment Commission has been busy developing a strategy to help low-income residents become more financially stable, supported with a grant from the Cities for Financial Empowerment Fund. That strategy was presented at an event at the New Haven Opportunity Center on November 3rd. In addition to an interactive website which will offer advice and tools, including an innovative bank/credit union comparison tool, the city will soon be offering financial empowerment classes and one-on-one coaching.

Your Money Your Goals training

United Way of Greater New Haven’s Your Money Your Goals training series, using materials produced by the Consumer Financial Protection Bureau, is proving popular with service providers around the state. Two trainings have already taken place, and the third class, to be held in January, is already nearly full. Contact Joy Duva at 203 691 4203, jduva@uwgnh.org for more information about this training.