The Compass Guide to Small-Dollar Credit

Center for Financial Services Innovation
Thursday, February 27, 2014

The Center for Financial Services Innovation provides a set of aspirational guidelines for small-dollar credit products. The report emphasizes responsible underwriting as a key component of a high-quality small-dollar credit product. It also focuses on the importance of proper loan structure and pricing to maintaining the borrower's ability to repay. It defines the ideal small-dollar credit product as one which is made with a high confidence in the borrower’s ability to repay, is structured to support repayment, aligns profitability for the provider with success for the borrower, gives the borrower greater financial health, has transparent marketing, is convenient and provides rights for borrowers. The report provides detailed strategies for bringing credit products in line with each of these principles.