By now, you are most likely aware of the large number of Hispanics who are unbanked and underserved. Because many Hispanics are not a part of the financial mainstream, they haven't been able to build their credit history or borrow from traditional financial service providers. Many are unaware of what a credit score is, what credit bureaus do and how to establish credit in the first place.
 
Your credit union can take that first step to extend credit to the Hispanic community and help them build a credit history, while at the same time, start to build trust with the community. Small dollar loans that are offered with financial literacy can be tailored to this market, as well as to traditional members who have never built any credit, such as high school or college students.
 
An essential part of a credit building loan program is financial literacy. Generally, first generation Hispanics do not like to take on debt and are used to paying for items with money they have saved in non-traditional ways. Therefore, it will be important for you to inform the member that they cannot pay the loan off early.

 

You can emphasize this when extending the loan to the member, in marketing and financial literacy materials and by offering live financial education sessions at your credit union, at a local church or at a non-profit organization that serves Hispanics. Once they have paid the loan off, celebrate their accomplishment and inform them of how they can now apply for a slightly higher dollar loan or other products and services at the credit union.