Understanding Credit Risk Can Help Underbanked
Make Smart Loan Choices
AFSAEF Releases Second Booklet in Personal Loans 101 Financial Literacy Initiative
WASHINGTON, May 1, 2012….Enabling the 30 million “underbanked” Americans to understand the risk inherent in different personal loan products is the aim of the second quarterly booklet in the Personal Loans 101 financial literacy project, released today by the American Financial Services Education Foundation (AFSAEF). The booklet, Understanding Your Credit Risk, follows Understanding Personal Loans, which explains financing terms and other aspects of traditional installment loans.
Understanding Your Credit Risk details a number of factors that potential borrowers should consider when assessing the risk of a particular type of loan. Borrowers can increase their chances of finding a loan that fits their needs by selecting a lender that assesses their ability to repay a loan by looking at credit history, income, expenses and existing debts (“underwriting”). The booklet explains the risks of loans that must be repaid in a single “balloon” payment or that require a post-dated check or collateral such as a car title. It also explains that borrowers who use lenders that report to credit bureaus can improve their credit and, by doing so, increase the number of credit options that are available to them.
“Consumers typically do not think about loans in terms of risk,” said Susie Irvine, President of AFSAEF. “Doing so can help them select the best loan to meet their needs. These new materials are intended to provide the information borrowers need to ensure they do not take on too much risk. They are designed to be used with the other materials available through our Personal Loans 101 campaign.”
Future booklets in the Personal Loans 101 series will cover The True Meaning of APR and Identifying Safe Personal Loan Options. Individually and collectively, the brochures will explain the advantages of traditional installment loans that are fully amortized, underwritten and repaid in regular installments made up of both principal and interest.
Personal Loans 101 materials are available online, and on Facebook. You can also follow Personal Loans 101 on Twitter. Printed versions of the brochures are available from the American Financial Services Association Education Foundation, 919 Eighteenth Street, NW, Suite 300, Washington, D.C., 20006-5517, 888-400-7577, firstname.lastname@example.org.
AFSAEF's mission is to help consumers realize the benefits of responsible money management, understand the credit process, and seek help if credit problems occur. More information is available at www.AFSAEF.org.
Kristen Potter 904-755-9722
Karen Klugh 202-776-7308
Understanding Credit Risk Can Help Underbanked Make Smart Loan Choices