New RCT Study of Working Credit Shows Positive Results

New data from Alicia Sasser Modestino at Northeastern University’s Dukakis Center for Urban and Regional Policy shows just how effective Working Credit’s financial wellness program is at helping participants quickly and dramatically raise their credit scores. As a result of Working Credit’s combination of education, credit wellness counseling, and data-informed feedback (and for some, use of a secured credit builder loan), participants lowered rates of delinquency and established credit where they had none.  Most consequential was the significant number of participants who achieved a prime score (over 660), allowing them to access competitive rates and terms in the marketplace, apply for higher quality rental housing and employment, and qualify for mortgages.

The Randomized Controlled Trial (RCT) study looked at young adults enrolled in Boston’s Youth Credit Building Initiative, which launched in early 2016 employing Working Credit NFP’s specific financial wellness program. The Initiative was sponsored by the Mayor’s Office of Financial Empowerment in collaboration with Citi Community Development.  Over 300 young people, age 18-28, participated in the RCT, with half in a treatment group and half in a control group.  Among treatment group members at the six-month mark:

--the share with prime credit scores (above 660) increased by 6.7 percentage points (vs. a decline of 0.7 percentage points for the control group)

--the share that established credit for the first time grew by 11.3 percentage points (vs. a decline of 4 percentage points for the control group)

--the delinquency rate declined by 13.3 percentage points (vs. an increase of 0.8 percentage points for the control group)

Modestino and her team will continue to gather participant information at 12 and 18 months.  Based on Working Credit’s own data, we anticipate Northeastern will see small-scale improvement in credit scores at 12 months, but a notable jump at the 18-month mark.  More to come.

View the complete report, “An Evaluation of the Boston Youth Credit Building Initiative: Baseline Report,” or view the Executive Summary.

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