Claudia’s dreams: health, credit & a new bakery

When Claudia’s husband was offered a job in the United States, she encouraged him to take it and insisted that the entire family—the two of them and their two children—move from Guatemala to build a new life for themselves. It was important to Claudia that their family stay together.

Three thousand miles later, their family reached Virginia, their new home. Claudia’s husband started his new job, and Claudia devoted herself to caring full time for the children and improving her English skills. She did this with a specific goal in mind: she wanted to start a bakery business, just like the successful one she had proudly founded and operated in Guatemala.

Claudia and her family had been living in Virginia for just over a year when Claudia had a fainting episode and had to be rushed to the emergency room. She had low blood pressure, and her blood sugar had dropped suddenly.

Shortly before, her husband’s employment contract had ended. Claudia no longer had health insurance. The doctors quickly cleared her and ran minimal tests, but the hospital bill still added up to $6,000, far more than she could pay out of pocket. Claudia had no option but to enroll in a payment plan with the hospital.

Before applying for the payment plan, Claudia hadn’t given much thought to building a credit history. Moving to a new country required her to navigate countless unfamiliar systems and bureaucracies. Claudia had enough on her plate. Building credit simply hadn’t been a priority.

But when she applied for the payment plan with the hospital, Claudia had her first encounter with the costs of being credit invisible in the United States. Without credit, she was subject to high-interest rates on the bills that were already a burden to her household budget. She had to use her husband’s credit card to make the payments on her medical bills, and the medical debt resulted in his credit score dropping considerably.

With her bakery aspirations in mind, Claudia decided to prioritize building her own credit history. But motivation wasn’t enough. She had no idea where to begin.

A friend encouraged Claudia to visit Northern Virginia Family Service (NVFS), a social services nonprofit that supports families throughout the region and facilitates leadership-building and innovation among community members. One of NVFS’s programs, called Escala, provides one-on-one small business development counseling to Latino families. A long-term goal of the program is to contribute to asset-building and wealth creation for low- and moderate-income Latino residents of Northern Virginia.

Claudia enrolled in a seminar called “How to Start a Business.” It was in that course that she first learned about Lending Circles.

NVFS had joined MAF’s nationwide network of Lending Circles providers in 2015. Given their existing programs to support asset-building, credit-building, and small business ownership throughout Northern Virginia, and their reputation as a trusted provider of culturally relevant programs, the partnership was a perfect fit. By integrating Lending Circles into the existing suite of programs, NVFS was able to offer a proven path to better credit for clients already dedicated to improving their family’s financial health.

Without her own income, Claudia was not eligible to join a Lending Circle on her own. But the Escala staff helped her leverage her husband’s income to meet the eligibility requirement. This accommodation captures what makes the Lending Circles approach different than the rigid requirements of many standard financial institutions’ credit-building opportunities.

The Lending Circles program is built to work with families, not against them. It takes into account the reality of their lives, and the services are tailored to meet people where they are.

Claudia joined a Lending Circle and began making payments to build herself a credit history. The financial education integrated into the program provided her with tools she could use to pursue other credit-building opportunities and develop her financial health. She opened her first bank account, set a savings goal for herself, created a budget that would help her achieve her goal, and began exploring the financial products that would be available to her once she had established sufficient credit. Through Lending Circles, Claudia’s credit score has increased from 0 to 680.

Becoming credit visible was empowering for Claudia. She felt an expanded sense of hopefulness and opportunity. Doors were opening for her. She was getting closer and closer to her dream of opening her own bakery.

With her new credit score, Claudia first turned to her medical debts. She was able to refinance her payment plan at the hospital to lower her interest rates, immediately saving herself $200 that the previous interest rate had added.

Next, Claudia applied for a personal loan that she used to contribute to her nephew’s tuition in Guatemala. Her credit score was a personal feat, but it also had important implications for both her immediate and extended family. The opportunity afforded to her by her credit score transcended her social network and crossed international borders.

Claudia has since joined a second Lending Circle. Beyond continuing to build her credit score, Claudia’s goal for this circle is to use her loan to finance the startup costs of getting her bakery business off the ground, including business registration, access to a commercial kitchen, and business supplies. Every day, Claudia’s credit score, her financial savvy, and her determination and perseverance take her closer and closer to her dreams.

Special thanks to NVFS Lending Circles Site Coordinator Karina for her contributions to this story.