At the Boston Builds Credit Year One Convening event, faculty member and Dukakis Center associate director Alicia Sasser Modestino shared her final report on the Boston Youth Credit Building Initiative (BYCI). Released by the Mayor’s Office of Financial Empowerment (OFE) in partnership with Citi Community Development and Working Credit NFP, the report evaluates BYCBI, a pilot aimed at helping low- and moderate-income young adults, ages 18-29, establish and/or improve their credit through credit building workshops, one-on-one financial coaching, and the chance to apply for a free credit building financial product. BYCBI’s success led to the creation of Boston Builds Credit, a first-in-the-nation citywide movement to help Boston residents achieve a prime credit score, build wealth, and remove barriers for success.
The study assessed whether the BYCBI increased both access to credit as well as individual credit scores. Roughly 300 program applicants from organizations including Year Up, City Year, ROCA, Madison Park Development Corporation, Boston’s Department of Youth Engagement and Employment, Roxbury Community College and the City of Boston participated.
Since little is known about the benefits of financial coaching, Modestino recognized a unique subject of study in the BYCBI and led the research.
“This study is one of the first to apply the most rigorous evaluation standards to study the effects of a novel financial coaching program aimed at building credit among young adults. The results are highly encouraging that with the right mix of information and guidance, tailored to the individual, we can increase access and boost credit scores. Policymakers in other cities can use the results of the BYCBI as a model to help guide the inclusion of financial capability in their youth workforce development programs,” said Modestino.
The study found the following:
- BCYBI participants were more likely to gain access to credit, since the share of individuals enrolled in the program with no credit score had fallen by 11 percentage points. Those not enrolled in the program had a decline of only 4 percentage points.
- BYCBI participants significantly improved their credit score, ultimately raising the likelihood of achieving a “good” credit rating by 8 percentage points.
- Younger BCYBI participants (ages 18-24) showed the greatest benefits, improving their credit scores by 30.5 points.
- The BYCBI had meaningful impacts on individuals beyond improving their credit scores, including lower interest rates on car loans and increased financial literacy.
These findings show the potential power of youth credit building, as well as how Boston Builds Credit is promoting credit building to young people, among other target groups. OFE collaborated with a large network of community partners on this initiative, recruiting organizations that provide workforce development and other services to individuals ages 18-29 that were willing to incorporate credit building into existing programming.