Boston Builds Credit creates innovative standards for credit-building products to close racial wealth gap, help residents improve credit scores
As part of its mission to help Bostonians build prime credit scores and achieve financial well-being, the collaborative citywide initiative Boston Builds Credit has developed new standards for credit-building products that can help residents establish or improve their credit. These new standards – now a model for consumer protection partners nationwide – have led Boston Builds Credit to award its first seal of approval to the FAIR Credit Builder, a special low-risk loan designed to help users demonstrate a positive payment history and build good credit.
While a poor credit can make it difficult to rent an apartment, buy a car, or even secure a job, a good credit score can help individuals access lower interest rates and beneficial savings and investment opportunities. This makes credit building a powerful tool for shrinking the racial wealth gap, as many of the nearly 200,000 Bostonians with poor or no credit hail from neighborhoods that are predominantly communities of color, such as Roxbury, Dorchester, and Mattapan.
“Boston Builds Credit is doing critical work to address systemic racial inequities and help all Bostonians have the ability to build wealth,” said Mayor Michelle Wu. “This is especially important for our recovery from the pandemic, as residents need the skills to build strong credit for their financial stability.”
The FAIR Credit Builder is a product offered by nonprofit Prepare + Prosper and backed by Sunrise Banks. With no money needed upfront, the loan offers an accessible and affordable way to start building credit.
“FAIR is excited to be a part of Boston Builds Credit, because we both envision a future where underserved communities have access to wealth-building financial services, reduced reliance on wealth-stripping financial products, and more confidence in the day-to-day management of their financial lives,” said Kim Hover, financial inclusion manager at Prepare + Prosper. “With the values of trust, transparency, and partnership as our foundation, this future is well within our grasp.”
Boston Builds Credit developed its standards for credit-building products in collaboration with Bank On Boston, a City-led initiative that connects residents with reliable financial products and services. The new standards apply to both credit-building loans and secured credit cards. In both instances, the standards vet products for such features as affordable annual percentage rates, no or low fees, no or low barriers to entry, and easy online access. Products must also report to all three credit bureaus to ensure a positive impact on a user’s credit score.
“The FAIR Credit Builder offers Boston residents who are looking to improve their credit score a safe, affordable, and truly useful credit building loan product,” said Michael D. Andelman, Bank On Boston program manager and staff lead for Boston Builds Credit. “We thank and congratulate Prepare + Prosper for offering this terrific product, receiving the first Boston Builds Credit seal of approval, and leading credit building access efforts nationwide.”
Boston Builds Credit – a program created by the City of Boston, United Way of Massachusetts Bay and Merrimack Valley, and LISC Boston – connects residents to free resources such as financial coaching, credit workshops, community resource nights, and online comparison tables for both credit-building loans and secured credit cards. This spring, the program launched an advertising campaign, “Hey Boston! Let’s Talk About Credit,” throughout the city to get residents talking about and working on improving their credit.
“Black and Latinx Bostonians have been denied opportunities to build wealth and accumulate assets for generations due to a credit system with predatory and discriminatory practices,” said Bob Giannino, President and CEO at United Way of Massachusetts Bay and Merrimack Valley. “Through providing financial health resources and developing standards for credit-building products, Boston Builds Credit works to close the racial wealth gap and provide members of our community with a foundation to improve their financial health.”
About the Mayor’s Office of Financial Empowerment
The Office of Financial Empowerment (OFE) was created in 2014 to address racial wealth disparities and connect City residents with access to credit building programs, financial education, individualized financial coaching, and income support. Residents who seek to improve their financial stability can use these free programs to achieve economic well-being and pursue financial prosperity. OFE is also a lead partner on Boston Builds Credit, the first municipal credit building program in the United States. OFE is an affiliate of the Mayor’s Office of Workforce Development and the Boston Planning & Development Agency. Boston Builds Credit and Bank On Boston are both programs of the Mayor’s Office of Financial Empowerment.
About United Way of Massachusetts Bay and Merrimack Valley
United Way of Massachusetts Bay and Merrimack Valley is a leading civic engagement organization dedicated to responding to our region’s most pressing issues like housing stability, economic mobility, healthy child development and educational success. We listen and work with communities to identify areas of greatest need and innovative approaches to address them, and then mobilize donors and corporate partners to provide resources to create positive lasting change. We have a vision and a mandate to empower stronger, more equitable communities, and we have the scale and reach to help. Our deep partnerships with hundreds of nonprofit organizations, state and municipal leaders, and businesses make us the region’s go-to mobilizer to address urgent needs and activate comprehensive, long-term solutions. More information is available at unitedwaymassbay.org. Follow us @unitedwaymabay and #LiveUnited.