TORONTO, Nov. 7, 2019 /CNW/ - The DUCA Impact Lab is announcing an initiative aimed at exploring the impact of low cost, cash flow based lending on fostering greater financial health for credit challenged individuals and reducing the risk of falling victim to predatory debt. Credit Canada Debt Solutions will join existing partners CacheFlo Pro and the Learning Enrichment Foundation as they continue to grow the initiative.
DUCA Impact Lab intends to work with its partners to build banking that benefits all. It's also a natural extension of the DUCA Impact Lab's founding organization, DUCA Credit Union. "Helping people with their finances is one of the best ways to have a tangible impact on their lives," says Doug Conick, President and CEO of DUCA Credit Union. "It's a big reason why we take our mission at DUCA to help people, businesses and communities to do more, be more and achieve more."
Driven by a cooperative philosophy, DUCA Credit Union has been providing Ontarians with member-centric financial services since the 1950s. DUCA's founding philosophy of 'profits with a purpose' is woven into every aspect of the work it does. The DUCA Impact Lab stands to prove that there are scalable, viable ways to provide services to maximize positive impact. This innovative approach will help DUCA develop new financial solutions as a leader in innovative banking practices aimed at helping people and businesses do more, be more and achieve more.
Keith Taylor, Executive Director of the DUCA Impact Lab says they have been testing an innovative loan model for credit challenged individuals who are in trouble with high cost debt. "The people we work with are usually in a financially precarious position with very little savings to fall back on. They generally have what would be considered a challenging credit profile when using traditional indicators."
Individuals in this situation have difficulty accessing mainstream credit solutions and as a result, have large portions of their incomes tied up in high cost debt repayment, impacting their ability to save and build financial security. "It's a vicious cycle that's hard to get out of. If you use large portions of the money you earn for high cost debt repayment, you can't save, which means you're more likely to utilize high cost debt services in future." says Mr. Taylor.
It's a problem Credit Canada Debt Solutions encounters regularly. "Many of our clients come to us because they're stuck in a payday loan cycle—using payday loan after payday loan, trying to catch up but only falling further and further behind," says Credit Canada CEO, Laurie Campbell. "Or they've taken out high-interest loans. In one case a client was paying $12,000 in upfront interest for a $9,000 loan. People are desperate which makes for very poor decision-making. The problem is they have no other options. This partnership is changing that."
In addition to the exorbitant cost, these types of lenders are often not reporting loans to credit bureaus, which means that borrowers don't have a chance to build their credit, even if they pay the loan back exactly as agreed. The partnership addresses this issue by allowing borrowers who successfully repay low cost loans offered by the DUCA Impact Lab a chance to improve their credit scores and avoid high cost debt in future.
"This initiative meshes well with our own financial literacy efforts to see people lead financially healthier and happier lives," said Julie Kuzmic, Equifax Canada's Director of Consumer Advocacy. "We're eager to play a role in helping people stay on top of their finances making it easier to handle those major milestones like buying a house, a car or obtaining a credit card by providing access to credit information to DUCA Impact Lab*. Ideally, this initiative will help people establish a good credit history and improve their credit scores. It will lead to deeper understanding of how credit can work to their advantage."
*Access to consumer credit reports from Equifax Canada requires the consent of the consumer and a permissible purpose according to applicable consumer reporting legislation.
The DUCA Impact Lab has been purposefully designed to test and prove new models of banking and finance to unlock the positive impact and social value banking can have for people, businesses, and communities.
DUCA Credit Union launched the DUCA Impact Lab in late 2018 to explore and live test new banking solutions that unlock the potential of banking that benefits all. The DUCA Impact Lab brings together a community of experts to dynamically test new ideas, products and services, acting as an ongoing vehicle to explore and tackle challenges currently faced by all participants in the financial system and the underbanked.
SOURCE The DUCA Impact Lab
For further information: Keith Taylor, Executive Director, DUCA Impact Lab, [email protected], 647-460-7628