Lending Circles - Credit Building Loan
What is it?
- Lending Circles is micro-loan program providing participants with a zero-interest loan to help build credit.
How Does It Work?
A group of people form a “Circle” and lend money to one another with all proceeds to be paid out in a specified time. A Circle must meet these requirements:
- Have seven to twelve in a group
- Decide on the amount of the loan
- Determine what order each person receives his loan
- Attend an initial orientation where the above decisions are made
- Participate in Financial Education. The options are a Two Cents workshop or complete 5 online modules (out of 20)
Who is Eligible?
- Must be 18 years old
- There is no minimum income requirement
- The maximum Income must be at or below 80% of Area Median Income (see chart below)
- Must have personal e-mail account (not shared)
- Need a photo ID + SSN or ITIN Government issued. (Not U.S. citizen is ok or unexpired consular ID is ok)
- Must have a checking account for auto withdrawals (not savings account)
- Debt to income must be under 50%
How much will I get?
- The monthly loan payment can be between $50 to $200 per month (in increments of 50), so the amount of the loan will be dependent on the amount and the number of participants.
How will my credit improve?
- The loan will be reported to the three major credit bureaus each month instead of the standard once per quarter.
What documents do I need?
- Proof of income
- Two full month’s pay stubs
- Debt to income ratio<50%
How long is the commitment?
- Each Lending Circles group cycle lasts no longer than one year depending on the number of participants in the circle to have a positive impact on participants’ credit score and to reinforce consistent savings habits.
Why We Do It