Promoting Economic Mobility and Racial Equity Through Credit Building

Boston Builds Credit marks first year of impact

By Robert Burns, Citi Community Development and Brigid Boyd, United Way of Massachusetts Bay and Merrimack Valley

“A good credit score is crucial in today’s economy, and Boston Builds Credit gives us real tools to continue our work in addressing income inequality and increasing economic mobility for thousands of our residents,” said Boston Mayor Marty Walsh.

Two years ago, Cynthia signed up to attend a one-day community resource fair in Roxbury, Massachusetts with the hope of finding help to improve her financial well-being.  “When you are dealing with life day in and day out with no credit and not enough income, it takes its toll,” she said.

Cynthia had always worried that checking her credit score would discourage her even more.  Turns out, this simple step was all she needed to move forward.  She enrolled as a client with the Roxbury Center for Financial Empowerment, a City of Boston program that provides free financial coaching and credit building, working with Boston Builds Credit (BBC).

Cynthia learned her score wasn’t as disastrous as she thought, and more importantly, she was able to develop an action plan with free assistance from a trained financial coach.

Having a good credit score is essential for things like qualifying for a loan or getting a credit card; but a lower credit score can hurt your ability to rent an apartment or get a job, and make accessing credit far more expensive. For example, Bostonians with a bad credit score (<660) can pay up to $238,000 more in fees and interest rates over a lifetime than those with good credit. Yet in the U.S. today, 26 million people – the majority of whom are black, Latino or living on lower incomes — are ‘credit invisible’, having a thin credit file or no file at all.  Far more than just a number, a good credit score can open the door to avoiding high interest rates and fees, and provide access to safe and responsible financial products and services.

This is why Citi provided early-stage support for Boston Builds Credit, a collaboration with the United Way of Massachusetts Bay and Merrimack Valley, the City of Boston and its Office of Financial Empowerment, and LISC Boston that helps residents work towards a prime credit score, build wealth, and remove barriers to success.  Boston Builds Credit leverages credit building as an opportunity to help improve the financial security and stability of residents in Boston. It not only has the potential to help alleviate the burden of expense inequality for Boston residents, but it is also a path to economic resilience and mobility that can have generational effects.

In its first year, Boston Builds Credit has made great strides:

• 2,400 people received a Financial Check-Up, a one-on-one credit report review with tips to build credit
• 2,000 people attended a credit-building workshop
• 1,560 people took advantage of financial coaching
• 523 clients increased their credit scores by 30+ points
• 156 clients established new credit, achieving an average credit score of 694 – considered a “prime” score

Local leaders representing government, employers, higher education and community-based organizations recently joined Boston Builds Credit to celebrate these successes and share best practices in moving the work forward. During the event, community leaders learned about the potential of youth credit building to support economic mobility for those beginning their working careers, trends in consumer education from the Consumer Financial Protection Bureau, and explored baseline data around credit conditions in Boston.

Together, we are showing how credit can play a critical role in expanding financial resilience for Bostonians, but scaling these efforts requires multi-sector engagement.

Next, Boston Builds Credit will launch a public information campaign to build awareness about the importance of good credit and will continue to grow and expand the Youth Credit Building Initiative. From Atlanta to Chicago to St. Louis, the BBC team is also supporting its peers who are collectively working towards credit as an asset. By investing in these approaches, our collaboration creates more inclusive economy for people like Cynthia, who was able to work with a financial coach and raise her credit score by 100 points.

By harnessing credit as an asset in Boston and beyond, we are expanding financial resilience and enabling greater economic security for residents and their families.