Unlocking the Mystery of Good Credit with the Financial Check-Up (FCU)

The FCU is a light-touch financial empowerment tool that includes a credit review with a coach and tips to help residents build their scores

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Eligibility

  • I am not an employee of BNY Mellon, or an immediate family member of a BNY Mellon employee
  • I am over 18 years of age
  • My organization is incorporated as a non-profit, for-profit, or hybrid organization, or I have a partner that is incorporated and could accept funds on my behalf
  • I have already piloted my initiative and have some initial evidence of impact
  • My organization is headquartered and creating impact in the United States

Gender

  • Woman

Where are you making a difference?

MA: Boston (02119)
The Office of Financial Empowerment is making a difference using the Financial Check-Up throughout Boston but the office where we provide most service delivery is in the 02119 zip code

Focus Areas (required)

  • Business & Social Enterprise
  • Children & Youth
  • Civic Engagement
  • Development & Prosperity
  • Human Rights & Equality

Date Started

1/25/2013

Organization Type

  • government

Project Stage: Select the description below that best applies to your approach.

  • Established (successfully passed early phases, have a plan for the future)

Budget

  • $100k - $250k

Website or social media URL(s) (optional)

https://ofe.boston.gov/

Twitter URL

@OFE_Boston

1.Founding Story: Share a story about the "Aha!" moment that led the founder(s) to get started or the story of how you saw the potential for this to succeed.

The Office of Financial Empowerment has had a very successful Volunteer Income Tax Assistance (VITA) program for 17 years. The FCU was created in 2013 to take advantage of a moment when taxpayers are receptive to talking about their finances as they wait for their tax preparer. A trained financial guide meets with an individual to (1) review (with consent) his/her credit report, including the FICO score; (2) provide a one-year financial plan with prioritization of credit issues; and (3) offer referrals to other services, depending on the individual’s needs and interest. This enables the taxpayer, often in underserved communities, to use the tax refund to pay off debt and build credit, improving his/her long term financial wellbeing.

2. The Problem: What problem are you helping to solve?

Boston is a city of 650,000 and approximately 1/3 of residents have poor or no credit. The FCU has been successful as a tax time asset building process and we have been expanding use outside the tax season, integrating the FCU into other events in the community and in partnership with other organizations to reach LMI individuals who need better credit to access affordable loans, credit cards, mortgages, apartments, jobs, utilities, and more.

3. Your Solution: How are you planning to solve this problem? Share your specific approach.

Our goal is to address income and expense inequality through financial education and one-on-one assistance on credit building. The Financial Check-Up (FCU) is a key tool to reach individuals to introduce credit as a topic, to help them learn to use credit to improve their finances instead of being a credit victim. We would use this funding to pay for a full time asset building coordinator who would train staff and volunteers to conduct the FCU both at tax time and in the community, integrating this program with municipal organizations and nonprofits to reach individuals throughout the City. Some individuals can use the FCU and the personalized advice received to improve their scores. For those with complicated credit issues, the FCU is a gateway to the free financial coaching offered by the OFE's Roxbury Center for Financial Empowerment, which works with Boston residents for 18-24 months, providing integrated financial and employment coaching. When working with a coach, a credit score can often be improved within 6 months. We also partner with other organizations that offer similar services and make referrals to them to scale our impact.

4. Example: Please walk us through a specific example of how your solution is working to solve the problem.

I led a Credit Building Workshop with FCU at a local sports facility recently to reach LMI parents who would otherwise have been watching their children's tennis lessons. The audience included 8 women with questions and a man who said nothing until the very end. He then told me he had been paying a law firm $300/month for several years to fix his credit issues. I asked if these efforts had been successful and he was unsure. I explained that while I could not promise fast or easy results the City of Boston wanted him to get free help with his credit and he could become a financial coaching client at the Office of Financial Empowerment's office in nearby Roxbury. He had a hard time believing that he had spent about $15,000 on services we would have provided for free. Reaching people to tell them about our resources is incredibly important so they receive help and are not scammed.

5a. Too many people in the U.S. have unmet needs for financial products and services. How is your work reaching a population(s) that is currently underserved? If it is not reaching an underserved population yet, how might it in the near future?

The OFE and Roxbury Center provide free financial education to Boston's most underserved residents to put them on a pathway to economic wellbeing. 21% of Bostonians live below the poverty level and 55% are of color. The Roxbury Center draws not only from Roxbury, a very poor neighborhood of Boston, but from neighborhoods throughout the City. The Boston Tax Help Coalition, also part of OFE, operates 35 tax sites in diverse areas of Boston where there is financial need.

5b. Please specify if the population you are reaching is underserved due to any of the following characteristics:

  • immigration status
  • work status
  • language
  • race/ethnicity
  • gender
  • age - youth
  • socio-economic class

6. Marketplace: Who else is addressing the same problem? How does the proposed project differ from these approaches?

A number of organizations provide financial education but Boston is the first city (as far as we know) to launch a citywide credit building initiative as a way to address expense inequality. We have partnered with a number of organizations and have identified four target groups in need of credit building in addition to LMI individuals: youth starting their working careers, small business entrepreneurs, low income workers of large employers, and recent immigrants who may be unscored

7. Impact: How has your project made a difference so far?

OFE knew anecdotally from taxpayers who had received the FCU in the past that they felt it was of value but we wanted more empirical evidence that it was making a difference. Accordingly, a research fellow from MIT designed and conducted a randomized control trial two years ago which measured the effectiveness and concluded that those receiving an FCU made progress in paying down debt and improving their credit. See https://ofe.boston.gov/new-report-financial-check-ups-boost-residents-financial-health/ In 2018, we provided about 2,500 FCUs at tax sites and over 800 individuals indicated interest in learning more about credit building so they are being contacted to participate in free financial coaching. Staff have also done about 100+ at local events.

8a. Spread Strategies: Moving forward, what are the main strategies for scaling your impact?

Our goal is to use the FCU as one of the ways to scale impact and reach as many individuals as possible to create systemic change by improving the finances of LMI residents through credit building. We have mentioned expanding the FCU outside the tax season. We plan to recruit and train volunteers to help us administer the FCU to reach more residents. A grant of $50,00 would pay most of the salary of an Asset Building Coordinator who would manage the FCU year-round and facilitate training and delivery in diverse parts of the City via numerous partners and a train-the trainer initiative.

8b. If applicable, which of the following scaling strategies have you launched?

  • Organizational Growth
  • Large Scale Partnerships
  • Trainings, Consultation
  • Campaigns

9. Financial Sustainability Plan: What is this solution’s plan to ensure financial sustainability?

The budget for the FCU includes salary and fringe for the Asset Building Coordinator, training and materials, stipends for part time tax site coordinators and Ambassadors who provide the FCU in 8 languages, and the expense of credit scores. The generosity of local banks and some CBOs has funded the development and growth of the FCU during the tax season and we are seeking additional funding to support our citywide credit building initiative.

10. Team: What is the current composition of your team (types of roles, qualifications, full-time vs. part-time, board members, etc.), and how do you plan to evolve the team’s composition as the project grows?

I've been the Deputy Director of the OFE for more than 3 years and hold a JD and MBA. The Roxbury Center for Financial Empowerment has seven staff, of which five are people of color. Four are full time financial coaches (one coaches in Spanish), one provides workforce development, and one focuses on outreach. Most have many years of experience in the community. The Asset Building Coordinator may be augmented by part time staff if needed. Other OFE staff support the Boston Tax Help Coalition.

Help Us Support Diversity! Part 1 - Which of the following categories do you identify with? (optional)

  • White (for example: German, Irish, English, Italian, Polish, French)

If you replied "Self-identify race, ethnicity, or origin" in the question above, please specify. (optional)

The OFE staff is diverse, as is the constituency we serve.

How did you hear about this challenge?

  • Ashoka page or contact
View more

Attachments (2)

FCU Flyer.docx

This flyer is one of several used to promote the Financial Check-Up to community based partners to persuade them of the value of incorporating the FCU into existing programs/events

Credit Matters flier with Roxbury Center info.pdf

This flyer is used to reach out to LMI residents to promote free credit building services

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