Building Credit History Among the AAPI Community
Capital One and the Chinese American Service League are preparing immigrants for success
Having a good credit history can make it easier to attain life milestones associated with the American dream, such as renting or buying a house, buying a car, and getting insurance, among other benefits. Yet an estimated 26 million people (or 11% of adults) in the United States are “credit invisible” and do not have a credit record at one of the three nationwide credit reporting agencies. People of color and those living in low-income neighborhoods, the Consumer Financial Protection Bureau noted, are more likely to have trouble accessing credit due to an unscorable credit record or no record at all. In particular, navigating the U.S. banking system can feel like an obstacle course for anyone unfamiliar with the credit system, including immigrants.
Organizations like the Chinese American Service League (CASL)—a Chicago-based nonprofit organization providing comprehensive programs to connect families and individuals in the Chinese community and beyond—are leading financial education workshops to help people learn just what it takes to build credit, alongside other vital housing and financial education services that the community needs. Since 2005, CASL has led programs to address wealth disparities in the Chinese community through seminars, workshops, and individual counseling and has helped thousands of clients improve their financial security, pursue homeownership, avoid foreclosure, gain financial skills, and access financial products to increase income, begin to save and build assets.
With an increasing number of Chinese immigrants moving to Chicago’s Chinatown, CASL is the only provider of HUD-certified housing counseling to Chinese speakers in the Midwest and thus plays an important role in bringing culturally competent and effective assistance to many local community members. As part of CASL’s goals to help low- and-moderate income (LMI) Chinese residents achieve a higher standard of living and a more balanced family budget, the organization incorporated Capital One’s Secured Card within an array of services that impact the housing, financial, and economic security of hundreds of LMI residents. Meant for consumers to build, establish, or repair their credit, the Capital One Secured Card reports to the three major credit bureaus—providing the opportunity to build credit with responsible use. This in turn can help people become better candidates for life goals such as mortgages, car loans and other credit cards.
Capital One Managing Vice President of US Card, Pawel Swiatek understands the desire of customers who want to build a credit history foundation in the United States.
“Credit is already a difficult concept for many consumers to understand," said Swiatek. "But it is especially true for immigrant customers who may not have full English fluency, the cultural understanding to know how many doors a good credit history can open, or even how to start building a credit history. At Capital One we strive to offer both the products and the support these consumers need to make sound financial decisions.”
The Capital One funded program has helped CASL clients better understand how their credit can be affected by external factors. In one instance, a client consulted with a CASL counselor after her credit score dropped from 748 to 607. When the counselor helped her obtain a full credit report, they learned that someone had not only applied for a credit card with her name, but that there was a past due balance in collection status. After filing a police report for identity theft and fraud, the dispute was successfully resolved in the client’s favor and the credit charge removed from her credit record. Her credit rating is currently recovering.
CASL worked with 150 clients as part of its credit building program this year. On average, participants who join the program see a 400-point jump in their credit score over time.
CASL is among the roughly 100 community-based organizations supported by the National Coalition for Asian Pacific American Community Development (National CAPACD), a progressive coalition of local organizations that advocate for and organize in low-income AAPI communities and neighborhoods. Capital One partners with the National CAPACD organization to disseminate national resources locally.
“Being able to support an organization that teaches credit-invisible individuals to build a credit history is critical in creating access to lifelong dreams desired by people for whom the English language is a barrier,” said Mariadele Priest, a Senior Director on Capital One’s Community Impact & Investment team. Since 2012, Capital One has worked with National CAPACD to support a broad variety of organizations that represent marginalized and credit invisible communities. “Capital One has a longstanding commitment to help the most vulnerable people recognize their potential, including supporting them as they create their own ways to support themselves and their families.”
Capital One’s continued support of National CAPACD and its affiliated organizations come as part of its Impact Initiative, a $200-million, multi-year commitment to support growth in underserved communities and advance socioeconomic mobility by closing gaps in equity and opportunity.
“The recent investments to build the capacity of organizations in Chicago ensured that a diverse base of Asian American residents is able to access these critical resources,” said Seema Agnani, Executive Director of National CAPACD. “Chicago’s AAPI community is the fourth largest AAPI poverty population in the country. When we began our partnership with Capital One, there were essentially no culturally and linguistically appropriate housing counseling services reaching these populations. Today, in partnership with CASL, we have built a network of services that is reaching the Chinese, Korean, South Asian, and many more underserved populations of the city.”
In recent times, Capital One has also partnered with National CAPACD to produce videos for people where English is not their primary language as a way to protect and educate Asian Americans on tips to avoid predatory financial scams while highlighting some of the common fraud warning signs and ways to avoid them. In addition, Capital One provided National CAPACD with a $5,000 grant to distribute the videos to their affiliate network.