Mark Elliott and Anne Roder
October 2014

Building Credit Where It’s Needed argues that it is critical for employment programs to engage their participants in credit building both before and after they start working. Mobility’s brief, which is based on its interim evaluation of LISC’s Family Opportunity Centers (FOCs) in Chicago, indicates that:

• 84 percent of people enrolling in FOCs had no credit score or a sub-prime score (below 620).
• Overall, 46% of participants were unscored; young people were much more likely to be unscored (69%) than their older counterparts (40%).
• Participants without a high school degree were three times more likely to be unscored than people with a college degree.

Although Mobility’s evaluation found no significant improvement in participants’ credit scores or their likelihood of having a score, there were signs of FOCs’ potential. FOC participants were much more likely to pay any of their trade accounts on time during the year after enrollment than people in the comparison group. This was particularly true for people who participated in the programs for three months or more. And, while only a few participants in the study enrolled in LISC’s Twin Accounts credit building program, those that did were much more likely to become scored and have a credit score above 620.

Building Credit Where It’s Needed concludes that given the exorbitant expense entailed by poor credit, it is essential for workforce programs to begin incorporating financial counseling and credit building into their strategies. Credit building could be particularly valuable in programs that invest in skills training and employment retention.

Read the Brief