For many Boston residents, “credit” can be a scary word. A reminder of money mistakes. A score to avoid. A part of an inscrutable financial system.
Roxbury resident Cynthia Jones had gotten to the point of dreading her mail. “When you don’t have money to pay off debt, you don’t want to look at it or touch anything related to it,” she said. “It feels like you’ll just get more discouraged.”
And yet, credit is also a powerful lever for economic improvement. Good credit opens doors to favorable car and home loans, even job and housing opportunities. Most tantalizing of all, you don’t have to be wealthy to build good credit – you only have to follow some basic rules.
That makes credit-building an exciting front in the City of Boston’s fight against economic inequality. When Jones finally got credit-building help, for example, she was able to increase her credit score by 100 points in six months.
“Credit-building is improving your understanding of what you have control of to reach important goals,” said John Barros, Chief of Economic Development for the City of Boston. “We want to empower residents so they understand how they show up as a risk-worthy investment.”
That’s why, in October 2017, Mayor Martin J. Walsh announced the launch of Boston Builds Credit, a citywide credit building initiative to empower Bostonians to build prime credit scores. The program – which helped Jones – provides free credit-building workshops teaching the dos and don’ts of credit use; 20-minute credit counseling sessions, called Financial Check-Ups; and ongoing, one-on-one financial coaching.
Last month, stakeholders from the public, private, and nonprofit sectors gathered to assess the initiative’s progress in its first year. Among the initial results:
- ~2,400 people received a Financial Check-Up
- ~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
Given these promising outcomes, initiative partners turned to the challenge of reaching more of the approximately 250,000 Bostonians with low or no credit score.
In their qualitative assessment of Boston Builds Credit, researchers from Brandeis University’s Institute on Assets and Social Policy found that a typical perspective among residents is that “credit can be a trap.” Compounding this problem is the presence of predatory, for-profit companies.
“We’re up against debt settlement and credit repair companies making false promises,” said Ricki Lowitz, co-founder and CEO of Working Credit NFP, a national nonprofit that partners with employers to bring credit-building services to employees.
Even the nomenclature can be confusing. Lowitz noted that one woman nearly skipped a credit-building workshop because she didn’t think the service applied to her; instead, she said, she was looking to get her credit fixed.
To address these misconceptions, Boston Builds Credit is launching a public information campaign this year to promote the importance of credit. The initiative is primed for the challenge by its strong public-private model, led by the Mayor’s Office of Financial Empowerment, Local Initiatives Support Coalition (LISC) and the United Way of Massachusetts Bay and Merrimack Valley.
“Credit-building in Boston is unlike credit-building anywhere else,” observed Lowitz, whose nonprofit operates in seven states. “I haven’t seen other cities yet that have been able to pull this [successful public-private partnership] off.”
The Brandeis researchers also found that partnership is integral to the initiative’s strength. “If replicated elsewhere, it would need a public-private model that has the same level of commitment,” said researcher Jessica Santos.
Rosemary Brown, an IT worker at Boston Medical Center who attended the conference, was hardly surprised by the outpouring of energy she saw in the room.
“This is Boston to me,” she said. “There’s always a willingness to do more.”
Brown benefited from Boston Builds Credit herself, taking advantage of a credit-building workshop offered through her workplace. At the time, she had been haunted by a 30-day period between jobs when, she said, “my credit plummeted….Those thirty days followed me years later.”
Brown openly wept while describing how the workshop and follow-up coaching turned around her credit – and her financial situation.
“I have more time to spend with my daughter, more cash to do activities with her, more to save for retirement,” she said. “If you invest in us, I guarantee we will invest in this city – because we want to.”