LONG ISLAND CITY, N.Y. (4/18/14)--The credit cycle, especially for the impoverished, can pull people and their finances down into what seems like an inescapable abyss.
One New York-based organization, with its very own credit union, has decided to replace that downward cycle with a system of its own, one that is helping some of the most economically disadvantage climb out of those deep holes (NY1.com April 17).
The cycle is orchestrated by Urban Upbound, a nonprofit based out of Long Island City, that aims to position residents of public housing neighborhoods to achieve economic mobility and self-sufficiency, and to break the cycle of poverty.
To accomplish this, the organization bundles together and offers residents five types of services, including financial counseling, employment services, youth development and college access, community revitalization, and finally financial services through Urban Upbound FCU, Long Island City, N.Y., with $780,000 in assets.
Together, the programs teach residents how to improve their financial health, help them secure employment and advise them on how to manage their income once they've landed that new job, among other services.
"And it makes sense," says Lenese Vergara, director of the Urban Upbound Workforce Development Program. "We're seeing more and more employers are checking credit, screening our candidates because of their credit."
Often, residents with rougher credit scores start at the organization's Financial Empowerment Center, where they receive free one-on-one counseling on how to budget and reduce debt.
From there, the individuals are sent just around the corner to Upbound FCU, where they can apply for a credit consolidation loan; a program that already has demonstrated tangible results.
"(Members' scores can rise) 100 points higher in just one month, just from that one loan from the credit union," Robin Wilson, director of the Urban Upbound Financial Fitness Program, told NY1.com, adding that people aren't able to access that kind of product through a mainstream bank.
With improved credit, then, the individuals are rerouted back to the workforce development program, which has found hundreds of people new places of employment.
"Our average wage is about $11 an hour, so that's excellent for the people we are working with, with only a high school diploma," Vergara said.
The next step in the cycle directs the residents back to the credit union where they not only can obtain checking and savings services--often an unreachable goal for the impoverished in this community, as 30% of the residents are unbanked--but they also can learn how to manage their income through the free one-on-one consultation.
Thanks to the availability of the credit union, the residents can avoid check-cashing outfits, which often charge high fees for their services, while also learning healthy financial habits.
"In a six-block radius, there is no financial institution around," said Ash Exantus, Urban Upbound FCU CEO. "Most people are used to going to the check-cashing place. They don't go to the check-cashing place because they want to. They were going to check-cashing places because they had to.
"We want to see elevation, and as we see the city around us and the tide rising, all small ships have the capacity to rise together, and that's what we want to see," Exantus said.