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Social Lending Circles Help Subprime Consumers Build Credit

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Two years ago, Javiar Giron went bankrupt. The 46-year-old father of three had been doing fine since he came to the U.S. in 1985: He learned English on the street, bought a house and managed a carpet business. He began buying and selling, or “flipping,” houses on the side, but that tanked with the housing market and he lost two of his properties to banks.

Giron is emerging from the financial hole he spiraled into by participating in a lending circle – a form of peer-to-peer finance – as a way to save money with a no-interest, no-fee microloan and to build up credit. Participants in this age-old technique can be found in states from Massachusetts to California.

“Credit is gold in the U.S.,” Giron says. “You don’t have credit, you don’t have anything.”