On a block in Bridgeport, Connecticut, a row of small houses are each topped with solar panels. The homeowners might not have normally considered solar or been able to afford it, but they’re part of a program that helps lower-income households access solar power and efficiency upgrades. They now save hundreds of dollars each year on energy bills.
It’s one example of the work done by the Connecticut Green Bank, the country’s first bank of its kind—and an example of the type of work that could be done at a national climate bank, designed to help the U.S. quickly deploy wind and solar power, electric vehicles, and other climate tech. If the National Climate Bank Act, which recently passed with a bipartisan vote in the House, moves forward, it could also help provide millions of new jobs at a time when millions of Americans are out of work because of the pandemic.
“Technologies like utility-scale wind and solar are growing,” says Jeffrey Schub, executive director of the Coalition for Green Capital, a nonprofit that advocates for green banks. “But everything just has to be done faster.” A national climate bank (or, as Congress is also calling it, a Clean Energy and Sustainability Accelerator) could help drive investment in areas where the market alone is slower.
This story is part of Fast Company‘s Building Back Greener package. As the COVID-19 pandemic and climate catastrophes continue, we’re looking at what should come next, and how we can reshape our climate future through the coronavirus recovery decisions we make now. Click here to read the whole series.
The idea of a national climate bank first gained momentum after the last recession, in 2009, but at the time, it was part of a bill that also included cap and trade (limits on emissions and the ability for companies to trade emissions “credits”), and it didn’t pass. Afterward, some states began to form green banks of their own. Connecticut was first, in 2011. The organization—a nonprofit that invests public money to spur private investment—was able to support fledgling industries such as rooftop solar. It also discovered gaps, such as the fact that rich homeowners were much more likely to get solar panels than those with less money who had more need for the savings that solar can provide on electric bills.
“It was clear that low to moderate-income families were being left behind,” says Bryan Garcia, president and CEO of the Connecticut Green Bank. One challenge was that they didn’t have the credit scores to qualify for solar programs; the organization looked at credit scores and income and saw that there wasn’t a correlation. “Just because you’re low income doesn’t mean that you have bad credit,” he says. “There’s an unconscious bias that people have.” The green bank met with the industry and ultimately invested in a New Orleans-based rooftop solar company to help them begin operations in Connecticut, where they now offer solar leases and energy efficiency upgrades.
The organization has calculated that for each public dollar it invests in various programs, it mobilizes seven dollars of private investment. In the fiscal year that just ended, for example, it used $30 million in public resources to attract $270 million. “We saw $300 million of investment going into Connecticut’s clean energy economy,” says Garcia. “Of course, $300 million of investment means people are being put to work. They’re deploying solar projects, they’re deploying energy efficiency, they’re deploying fuel cells. The more investment that happens, the more jobs are created.”
The same thing can happen nationally, where the bank would be created as an independent, nonpartisan nonprofit—sitting outside the government, but capitalized with an initial appropriation from Congress—and could invest both in national projects, such as upgrades to the electric grid, and send money to state and local green banks. “Between 35 and 40 states want to have a green bank or something like it, but they don’t have the capital,” says Schub. That’s especially true as COVID-19 hits government budgets, including in the states and cities that do have green banks now. In Connecticut, nearly half of the green bank’s budget was recently cut to help balance a deficit in the state’s general fund.
A national climate bank wouldn’t be a complete solution for climate change. By one estimate, the U.S. should be spending a minimum of $600 billion each year to invest in the infrastructure needed to transition to a zero-carbon economy. With an initial appropriation of $20 billion, the national climate bank will leave a huge gap. But as in Connecticut, it can help spur more private investment. Many climate policy experts note that we don’t necessarily need new sources of funding to pay for climate action; instead, we need to redirect existing money—globally, for example, nearly $1 trillion went to fossil fuel investments last year, while less than a third as much went to renewables. Governments need to incentivize businesses to choose low-carbon investments, and a climate bank can be one source of those incentives.
It can also create jobs. In an independent analysis of the National Climate Bank Act, the Coalition for Green Capital estimated that it could create five million jobs in five years with an appropriation of $35 billion, or three million jobs with an appropriation of $20 billion. (In the recent vote, the House approved $20 billion; as the loans that are dispersed are paid back, the money will be reinvested.) “Because this is work that can’t be outsourced to their different outsource building upgrades, for example, it’s work that has to happen in every corner in the country, in every community,” he says. “So there’s work to be done everywhere.”
Most of those jobs wouldn’t be technical. “Very often, there’s a perception that the way to move people into the clean economy is to retrain coal miners to work to climb up on people’s roofs, which is all well and good and something that I think has a lot of validity,” Schub says. “But it’s actually just as much the case that people in the service economy—like waiters and waitresses and people from airlines who are being laid off and whose jobs are not going to come back—they have a place in a clean energy industry immediately, because there’s such a need for that kind of a service activity within the industry.” (One recent study suggests that as many as 42% of jobs lost during the pandemic won’t return.)
The investments can also help the U.S. lead in emerging industries making clean technology, such as electric vehicles. “One of the things that I keep thinking about as we convert to EVs is, where are some of those jobs going to go,” says Congresswoman Debbie Dingell (a Democrat from Michigan), who introduced the National Climate Bank Act in the House. “We need to keep that. I’m a car girl. So I need to keep the battery capability here. I don’t want us to have to import from China.”
A parallel bill is in the Senate, cosponsored by Senator Kamala Harris, and Joe Biden has also backed the concept. “The momentum is there,” says Schub. “We have a lot of confidence that this is well-positioned for an early 2021 stimulus bill.”
Is There a Difference Between No Credit and Bad Credit?
The short answer is yes, and understanding the difference could be instrumental in getting better credit.
No credit and bad credit often get grouped together. It’s understandable why, as they both sound similar enough. And if you have either, the next step forward is to focus on improving your credit.
The two situations aren’t the same, though. It’s important to know the difference, because the right way to build your credit often depends on whether you have no credit history or bad credit.
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The difference between no credit and bad credit
Having no credit means that there’s not enough information on your credit file to calculate a credit score for you. It’s also known as being credit invisible. Sadly, this is an issue that affects millions of Americans.
There aren’t any problems on your credit file; the credit bureaus just don’t have enough data on you. That means when a lender or any other third party checks your credit, there’s nothing to go on.
Meanwhile, “bad credit” is a common term used to describe a low credit score. That low score is because of negative items on your credit file, such as not paying your credit card bill.
When you have no credit, the solution is to build your credit. When you have a low credit score, the solution is to rebuild your credit. Now, let’s look at how you can do each one.
How to build credit for the first time
Here’s the simplest way to build credit:
- Open a credit card.
- Use the credit card for at least one purchase per month.
- Always pay your credit card bill on time and in full.
It’s that easy; that’s all you need to do to get a good credit score. When you use a credit card and pay the bill on time, you establish a positive payment history. That’s the biggest credit scoring criteria.
The tricky part when you have no credit is finding a credit card you can qualify for. Secured credit cards are one of the most common options for consumers in this situation. You pay a security deposit for this type of card, so it’s possible to open a secured card even if you have no credit.
If you’re in college, credit cards for students are available. These are often an option for applicants without any credit history.
How to rebuild a low credit score
It’s a little more complicated to rebuild your credit. First, you need to find out what negative items are affecting your credit score. Here’s how to start:
- Use an online credit score tool to check your score and learn about any items damaging your credit. If you have a credit card, there may be a credit score tool in your online account. If not, there are plenty of free ways to get your credit score.
- Request your credit report from the three consumer credit bureaus (Equifax, Experian, and TransUnion). You can pull a free annual credit report from each bureau, and through April 2022, you can get free weekly credit reports. Your credit report will show you exactly what’s affecting your credit.
Once you know what’s affecting your credit, you can work on correcting it. Below are a few of the most common issues and how to fix them.
Problems with your payment history
This includes anything related to not paying a bill on time, from late payments to having accounts go to collections.
The first step is catching up on your payments. If you can’t pay in full, contact your creditors and see if you can set up a payment plan with them. They may be willing to work with you if that means you’ll be making regular payments.
Next is rebuilding your payment history. The easiest option is to use a credit card at least once per month and pay in full by the due date. Why do you need to use a credit card? Credit card companies report on-time payments to the credit bureaus, which helps your credit score. With other types of bills, your on-time payments typically don’t get reported to the credit bureaus. That means you may not be able to improve your payment history with rent, utilities, or other monthly bills.
If you already have credit cards, you can continue using them to rebuild your payment history. If you don’t, look for secured credit cards and apply for one you like.
Using too much of your credit
A big factor in your credit score is your credit utilization ratio — your credit card balances divided by your credit limits. If this number gets too high, it can lower your credit score. The standard recommendation is a credit utilization ratio of under 30%.
Let’s say you have one credit card with a $4,000 balance and a $5,000 credit limit. That would put your credit utilization at 80% ($4,000 divided by $5,000 is 80%), a very high number that would decrease your credit score.
Fortunately, only your current credit utilization matters. Once you pay down your credit card balance, your credit score will bounce back.
Errors on your credit history
A low credit score may be due to an error and not any action on your part. This is why it’s so important to pull your credit reports from each credit bureau. By reviewing those, you can see if there are any mistakes.
If there are errors on your credit report, you can go to the credit bureau’s website to dispute them online and get them removed.
A low credit score and a nonexistent credit score are both things you can change. After you determine exactly what the issue is, you’ll be able to choose the best solution to fix it.
‘There is no new normal’: Worcester small business owner pivoted during COVID-19 and expects only more change after pandemic
It took about eight minutes for the bank to reject Natalie Rodriguez’s application for a loan through the Small Business Administration.
Rodriguez opened Nuestra, a Puerto Rican inspired restaurant in Worcester, in January of 2020. When COVID-19 arrived months later she discovered Nuestra wasn’t eligible for the federal or state funding that thousands of other establishments received.
To qualify, restaurants were required to show payroll and salary for years before 2020. Those figures didn’t exist for a restaurant that weren’t open in 2019.
“[I was] determined and knew that ‘no’ is not an OK answer,” Rodriguez said. “A door may close but you may need to kick down another door.”
Rodriguez then applied for conventional loans only to be led to more closed doors. Less than 10 minutes after applying for an Economic Injury Disaster Loan, she received notice that her poor credit score resulted in her application being denied.
Rodriguez used the dead end with the SBA to create a new path for herself and Nuestra.
She not only learned how to improve her credit but wanted to ensure others didn’t have to follow her journey as an entrepreneur.
Rodriguez extended the “Nuestra” brand to include financial advising. She started Nuestra Financial in April of 2020.
“Now I’m helping others. I’ve been able to restore my credit,” Rodriguez said. “I’ve been able to help others restore their credit and be able to help them make a business themselves if they so choose. I’ve been able to survive.”
Without grants and other funding, Rodriguez managed to keep her restaurant open through funds generated from Nuestra Financial.
“I was very quiet about it in the beginning. I didn’t want people to be like, ‘Oh look at this girl, she just opened a restaurant in the middle of a pandemic,’ and talk smack,” Rodriguez said. “About a month or two later, a light bulb hit and I was like, nobody pays my bills but me. I needed to mind my own business and not worry about what other people thought.”
In creating Nuestra Financial, Rodriguez said she’s helped Worcester residents restore their credit and purchase new vehicles and homes.
Rodriguez said financial literacy is rarely taught to children in school and wasn’t something she learned. When a situation arises like a rejection notice for an economic disaster loan, many don’t know how to respond or where to find answers.
Rodriguez said she’s helped young and old people, along with those who have bad credit or no credit.
“We lack the confidence, including myself, because we weren’t taught,” Rodriguez said. “So if you don’t know something, you weren’t taught, you’re not going to be confident about it.”
Coming out of the pandemic, Rodriguez remains confident about both her businesses. Nuestra, the restaurant, while closed for daily service continues to provide catering services. Rodriguez is still preparing what the future holds for the restaurant but plans to announce an update soon.
As masks start to become less a part of daily routines, Rodriguez, as a small business owner, doesn’t envision many differences from this year to last.
So many aspects of life remain uncertain from rising food costs to a potential third booster for vaccines and whether the country will ever reach herd immunity for COVID-19.
The pandemic arrived with Rodriguez immediately pivoting. As it approaches its potential end, Rodriguez will continue to do what helped her to navigate it.
“I feel like there is no new normal just yet,” Rodriguez said. “I think we’re all just trying to adjust and pivot at the same time and getting creative. I think it’s where we all are.”
Columbus Mattress Wholesale moves to newer, larger Gahanna store
More than four years back, Cathryn Clark’s boyfriend, Christopher Robbins, was on the hunt for a new mattress. He just couldn’t find one at an affordable price.
Clark, 29, and Robbins, 34, who are now engaged, were living in Franklinton, where they still live today.
They had no experience owning or operating a small business; Robbins worked as a retail assistant for SAS Retail Services while Clark worked as the communications director for two Methodist churches.
But in 2017, Robbins, with Clark at his side, took the leap and opened Columbus Mattress Wholesale on the West Side, with the goal of helping low-income consumers secure mattresses and other bedtime products.
“We really wanted to bring a store to people that, you know, they weren’t paying an arm and leg, but they still could get a good night’s sleep,” Clark said.
Customers at Columbus Mattress Wholesale can pay cash or credit, for example, but the business also works with financing companies that serve people without credit scores, with bad credit or who are lower income.
Last month, the business made a big move. It expanded from its original location on Harrisburg Pike to a store double the size at 435 Agler Road in Gahanna.
Clark said she and Robbins saw a need in the broader area, with many of their customers coming from outside the Hilltop, such as Linden.
Nestled between Dollar Tree and the Ohio BMV in Gahanna, the new storefront opened Memorial Day weekend and sells mattresses, bed bases, bed frames and pillows. Mattress prices range from under $100 to more than $1,000, depending on the size and brand, which includes some well-known names such as Serta, Beautyrest and Casper.
Clark said while she and Robbins originally sold solely Ohio-based brands, they’ve branched out to national brands as business has grown.
Columbus Mattress Wholesale also offers free same-day delivery on most orders from customers living in Columbus.
Clark does a little bit of everything for the business, from running communications, to working on the sales floor, to managing the sales team, to ordering what they sell.
She said a big mission for herself and Robbins, beyond doing business, is aiding the community.
“We’ve seen a lot of people struggle,” Clark said.
Clark said she and Robbins work to mentor other people who are hoping to open or currently own a small business. She added that the store starts employees at $17 per hour.
She and Robbins haven’t decided yet what they will do with the original location — which is currently closed — but said they might shift it into an accessory store.
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