The current credit reporting system in the U.S. creates a barrier for millions of low‐income individuals with poor or no credit to fully participate in the mainstream financial system. Yet good credit is essential to achieving and maintaining financial stability, accessing opportunities, and building a future that allows individuals to pursue their career and life goals. For example, nearly half of employers use credit checks when making a hiring decision, suggesting that having bad credit can be an additional barrier to landing a job—especially for positions that handle payments (Society of Human Resource Management, 2012). Unfortunately, individuals with no credit score – or poor credit scores – cannot easily access credit‐building financial products, leaving them with few opportunities to improve their financial situation. Financial capability programs can fill that gap by providing accurate and timely information on how the credit reporting system works, access to products that report to the credit bureaus, and support throughout the loan period from credit building counselors.
The Boston Youth Credit Building Initiative, developed by Mayor Walsh’s Office of Financial Empowerment and implemented by Working Credit NFP, aims to build financial capability among lowincome young adults. By helping young adults build or improve their credit history at a point in time when the information is relevant to their lives, the hope is that they can apply this knowledge in realtime and perhaps avoid making common mistakes that have long‐lasting consequences. Specifically, the program implemented by Working Credit provides a workshop that teaches participants how the credit reporting system works, one‐on‐one financial coaching on how to build or improve their credit history, and access to a secured loan and savings product that can be used to directly improve their credit score—at a time when many of these individuals are becoming financially independent. The basic premise of the program is to act as an “early intervention” to boost financial capability and develop good financial habits at a formative time when individuals are starting to build their credit history. Read executive summary.