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The world runs on credit. And that’s not good news for Detroit, where on average residents have among the worst credit scores in the nation. That’s a drag on the city’s efforts to repopulate its neighborhoods and build a stronger small business base.

Coming out of last week’s Mackinac Policy Conference, the Detroit Regional Chamber is making improving financial literacy in Detroit one of its top ongoing priorities.

“It’s key to reviving the city,” says Sandy Baruah, chief executive of the chamber. “If we can improve financial literacy and raise credit scores, now we’ve created a different kind of consumer, one who can go from renter to buyer.”

And since so many small business people rely on personal credit cards and loans to get their start, making city residents smarter about personal finance is also key to another priority for the chamber — fostering entrepreneurship.

To get there, the chamber has teamed with John Hope Bryant, a national advocate for financial literacy, with a plan to open five Hope Inside centers in Detroit. One is already operating in the Northwest Activity Center, sponsored by Fifth Third Bank.

Baruah says that simply walking in the doors of the center will improve an individual’s credit score by 50 points by cleaning up reporting errors.

After that, credit counselors help develop debt repayment plans, work with creditors and teach better habits with a goal of eventually improving credit scores by up to 200 points.

Detroiters have the 10th worst credit scores in the nation, according to Moneywatch. (Three other Michigan cities — Benton Harbor, Inkster and Flint — are also in the bottom 10.)

The chamber also intends to work with Junior Achievement of Southeastern Michigan to head-off bad financial habits before they form.

JA is undertaking an ambitious program to make eighth-graders in the city financially literate, hoping to teach them the skills they need before they begin taking part-time jobs.

Its three-year Financial Freedom Project aims to reach 8,000 young teenagers with 25 hours of instruction in personal finance and entrepreneurship. GM Financial is the major sponsor.

“Detroit’s recovery won’t be sustainable if we don’t teach the next generation how to manage money and create wealth,” says Margaret Trimer-Hartley, president of JA.

The combination of helping adults fix their mistakes and teaching students to avoid them should aid Detroit in building the sound financial skills base needed to speed its recovery.

“It’s one way you stabilize neighborhoods,” Baruah says. “A number of people in Detroit aren’t in the banking system at all. They have debts, but they don’t have access to credit.

“This gets them into the system and on their way to better management of their personal finances.”

This may not be as dramatic an effort as tearing down blighted buildings or erecting new apartments and offices downtown, but it is a crucial step to reviving the city and keeping it healthy for the long term.

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