Community Dividend

Native American Credit Counseling initiative aims to bridge the credit gap in Indian Country

A certification program created by Rural Dynamics/Consumer Credit Counseling Service of Montana is designed to build credit counseling education and services in Native communities.

Jolene Bach - Director of Communications, Rural Dynamics/Consumer Credit Counseling Service of Montana
Sue Woodrow - Community Development Senior Project Director

Published October 1, 2011  |  October 2011 issue

Native American communities have long ranked among the poorest in the United States. Two commonly cited barriers to their economic health are inadequate access to mainstream financial services and inadequate knowledge about banking and personal finance.1/ Native consumers and small business owners who face these barriers often end up seeking high-interest loans and other types of credit that strain their already stretched resources and deepen their debt.2/

Multiple studies identify credit management and rehabilitation as a key policy strategy for eliminating barriers to homeownership and business development in Indian Country.3/ But credit counseling services, which have served a critical role in helping people manage and rehabilitate their credit since the 1960s, are not always readily available in nonurban Native communities such as reservations. Fortunately, thanks in part to a counselor certification program developed in the Ninth Federal Reserve District, the situation may be changing. The Native American Credit Counseling (NACC) program is designed to encourage and support certification of Native counselors and thereby build credit counseling education and services in Indian Country.

Creating a supportive learning environment

The idea to create the NACC program grew out of a 2004 meeting of the Montana American Indian Housing Taskforce (MAIHT). Taskforce members convened to discuss repeated comments from their tribal partners about community members' difficulties in qualifying for housing financing due to poor credit. At the time, some limited financial counseling services were available in Native communities in Montana. Rural Dynamics/Consumer Credit Counseling Service of Montana (RDI), the state's largest financial counseling provider, was sending credit counselors to various reservation communities, such as Crow and Lame Deer, to teach personal finance classes and offer individual budgeting appointments. However, the number of counselors available for that purpose was limited, and RDI could not meet the demand for services.

Members of MAIHT approached RDI to explore the possibility of creating a program to promote certification of Native counselors and thus make credit counseling services more readily available in reservation communities. RDI delivered, and a pilot initiative—now called the NACC program—was launched in 2006. The program, which is supported by funding from First Interstate Bank, the Montana HomeOwnership Network, Fannie Mae, and Stockman Bank, provides a platform for participants to achieve the Accredited Financial Counselor certification from the Association for Financial Counseling Planning and Education (AFCPE). The AFCPE, one of several national entities through which financial counseling agencies pay memberships and dues and receive training, certification, and continuing education, offers several nationally recognized certifications for housing and financial counseling. Its Accredited Financial Counselor certification involves a self-study curriculum, two proctored examinations, and 1,000 hours of mentored practicum experience.

The NACC program achieves the standards set by the AFCPE but is distinct in creating a supportive, collaborative learning environment, dubbed a "learning cohort," that is made up of a cohesive group of practitioners with common goals for their educational outcomes. The learning-cohort environment enables participants to learn from one another through shared experiences and across geographical distances. The support it provides is particularly important for individuals who live in remote areas such as reservations and do not have ready access to certified credit counselors or mentors who can assist them through the certification process.

The NACC program uses a web-based delivery system for weekly classes that prepare participants for the two certification exams, and holds an in-person weeklong class before each of the two tests. Throughout the program, participants work together on team assignments and in weekly exercises, are encouraged to study together and utilize online chat boards and phone calls, and share experiences through group discussions and online postings. After they complete the testing, participants receive mentoring throughout the practicum experience and beyond. Once certified, counselors must maintain the certification through continuing education.

Expansion and evolution

There have been two NACC learning cohorts to date, and additional ones are planned for fall 2011 and spring 2012. The first cohort, the pilot program launched in 2006, included seven individuals from the Blackfeet, Crow, and Northern Cheyenne reservations and the Great Falls-based Little Shell Tribe of Chippewa. Five of the seven participants have completed the Accredited Financial Counselor certification. The in-person portions of the first learning cohort were all held in-state, at RDI's Great Falls headquarters and at affiliated locations in Browning and Billings. For the second cohort, launched in fall 2010, the NACC program expanded its reach to include participants outside Montana. Most of the members of the fall 2010 cohort work for housing organizations from across the Pacific Northwest. In collaboration with the U.S. Department of Housing and Urban Development's (HUD) Northwest Office of Native American Programs, RDI held one of the cohort's in-person classes in Tulalip, Washington, to accommodate the participants' needs. Training of the fall 2010 cohort is still in progress; participants plan to use the experience to expand their outreach to residents of homes financed through HUD's Section 184 Indian Home Loan Guarantee Program.4/

Terry Payne, tenant services advocate for the Spokane Indian Housing Authority, explains why she joined the fall 2010 cohort.

"I'm going for my certification because in our small community, as in others, financial education has not been a priority. I want to help people live less stressed and happier lives. I work with low-income tenants and homebuyers on a daily basis so they are able to meet their monthly expenses. I also have people coming in who are trying to qualify to purchase a home. I need more knowledge in the financial arena to be able to help guide people through this area of their lives. I'm very excited to integrate the counseling and coaching into a program that will offer knowledge and also allow the client ownership in the learning process."

In addition to expanding its reach beyond Montana over the last five years, the NACC program has refined its strategy and programming. For example, the program initially had a heavier emphasis on self-study, and there was only one weeklong training and testing period to cover both exams. Based on feedback from the first learning cohort, RDI added more group study to the fall 2010 cohort and divided the course into two segments, which allowed the addition of a second week of in-person training and testing before the second exam.

The program continues to evolve. Recognizing that there are varied needs for financial counseling in Indian Country, from basic household budgeting to estate planning, the AFCPE is working with RDI to establish specific levels of counseling certification for the NACC program. The fall 2011 and spring 2012 NACC learning cohorts will be offered in eight-week sessions providing two levels of certification, allowing participants to obtain the certification that best meets the needs of their communities. The first level of certification, Certified Credit Counselor, will focus on client service, budgeting, credit, debt, and strategic approaches to credit counseling. Upon completion, some participants may go on to the second level of certification, Certified Financial Planner, which will delve deeper into complete financial planning needs, including estates, insurance, taxes, and investing.

Creating the learning-cohort environment to meet the needs of individuals in remote areas continues to be an important aspect of the NACC program. To further enhance participants' learning experiences, the program has incorporated many lessons learned from the instructor training for Building Native Communities, a Native-focused financial education curriculum developed by First Nations Oweesta Corporation. RDI is partnering with experienced developers of nationally recognized Native financial education curricula to improve and refine methodologies to meet the learning and mentoring needs of Native credit counselor trainees. Through their collaboration, RDI and its partners hope to assist in building strong, vibrant Native communities by supporting their citizens' journeys toward financial health.

For information on applying for the NACC program, contact Tim Guardipee at timg@ruraldynamics.org or 406-454-5704. Classes are limited in size to create the learning-cohort environment, but are offered frequently in response to the demand.

Jolene Bach is the director of communications for RDI. Sue Woodrow is the community development advisor at the Minneapolis Fed's Helena, Mont., branch.


1/ See generally Jennifer Malkin, Financial Education in Native Communities: A Briefing Paper, published by First Nations Development Institute, the National Congress of American Indians, and CFED (Corporation for Enterprise Development) in 2003. Malkin's paper informed a May 2003 policy development forum on financial education in Native communities that was cosponsored by the three publishing organizations. See also the Native American Lending Study, published by the U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund in 2001.

2/ Kyle Smith, Predatory Lending in Native Communities, Native Assets Research Center, First Nations Development Institute, citing an analysis by the National Community Reinvestment Coalition of quantitative Home Mortgage Disclosure Act data for the years 1998–2000. The analysis shows that Native Americans had a significantly higher share of loans from high-cost lenders than non-Natives had. For example, in 2000, Native Americans were 1.93 times more likely than whites to receive a conventional home mortgage loan from subprime or manufactured home lenders (pages 15–16).

3/ Malkin, p. 7. At the May 2003 forum related to Malkin's work, attendees developed specific goals and objectives in five topic areas, one of which is "to expand credit management and rehabilitation services to Native American communities nationwide." See also CDFI Fund, p. 5 (citing lack of credit histories as one of five major economic barriers to capital access in Native communities) and p. 45 (the majority of the study's tribal respondents indicated that there are no programs available in their communities that provide consumer credit counseling or credit repair services, and that many Native Americans "lack an understanding of banking, credit reporting, and loan qualification processes and standards, and have difficulty obtaining credit because they have no credit or bad credit histories").

4/ HUD's Section 184 program provides mortgage loans to American Indian and Alaska Native families, Alaska Villages, Tribes, or Tribally Designated Housing Entities. Loans can be used for home construction, rehabilitation, purchase, or refinance, on or off Indian lands.

Building, repairing, and educating: Other examples of Native credit counseling services

The NACC program is not the only initiative in the Ninth Federal Reserve District that is addressing the need for credit counseling and credit repair services in Native communities. For example, Four Bands Community Fund, located on the Cheyenne River Reservation in South Dakota, has been offering a credit builder program since 2006. The program offers small loans, typically $500, to people who want to build their credit or repair damaged credit histories. By making timely payments, borrowers can improve their credit scores and thus improve their chances of qualifying for business, consumer, or home loans in the future. As a prerequisite, clients must complete the Credit When Credit Is Due curriculum developed by Consumer Credit Counseling Service of the Black Hills. According to Tanya Fiddler, executive director of Four Bands Community Fund, clients who complete the course have seen their credit scores increase 18 to 100 points.

Across the plains, LSS Financial Counseling Service, a division of Lutheran Social Service of Minnesota, has begun collaborative work with one tribe to offer telephone-based credit counseling services for tribal members. The LSS program recognizes that in small, close-knit communities such as reservations, residents with personal financial troubles might prefer the privacy that telephone counseling ensures. LSS hopes to expand the program to other Native communities in the region and will rely on strategic partnerships with tribes to do so.

"Phone-based services allow the freedom to get individual help confidentially, which works well so long as the service gets to know, and be known by, the tribal membership," explains Darryl Dahlheimer, LSS program director. "Trust is the foundation, so we want to be involved with financial education for Indian youth, with helping warn members about debt settlement scams, and with offering legitimate credit repair to make sure Native business dreams have no barriers."

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