District Digest

Many Americans take access to credit for granted. It's easy for them to underestimate the importance of credit. But without it, a person's economic advancement may become more challenging. For example, in many areas, the inability to secure an auto loan — and thus, a car — could limit employment options, access to healthy food, or medical care. Different people have disparate experiences in accessing credit. For those who are financially underserved, the market has produced credit alter­natives. But many of those alterna­tives, such as payday lenders, offer unfavorable terms that often make payoff difficult and may leave borrow­ers falling behind. One way of addressing such gaps in access lies outside the traditional credit system. Community devel­opment financial institutions, or CDFIs, are mission-driven nonprof­its and for-profits that deliver a range of financial products, services, and education to underserved individuals and communities. They provide credit where traditional lenders cannot and provide affordable credit where nontraditional — sometimes predatory — lenders do not.