Bad Credit can Haunt Dreams. Tools to Improve Credit have Huge Impact for Financial Opportunity Center Clients

Dawn McKeon, a 39-year-old single mother of three, wants to own her own home one day. Part of the dream, she says, is to find someplace quiet — possibly in Johnston or Cumberland — where her youngest son can play in the backyard.

“That’s a few years away at this point,” she said, “but it’s a great thing to work towards.”

Amos House is a nonprofit social services agency that provides hospitality and direct services to the homeless and poor of Rhode Island.

McKeon has been caught in a credit score crunch, but has been working with a financial coach at Amos House to try to bring her score up. Amos House, a social services organization in Providence, Rhode Island, provides financial coaching as part of the LISC Financial Opportunities Center (FOC) housed there. LISC also supports workforce training programs and supportive services at Amos House.

“It’s been a big weight on my shoulders for a long time,” she said. “I was always trying to do better but my debt just kept going and I wasn’t sure how I was going to get out of it — never mind improve my credit score.” McKeon lived in Amos House apartments while she participated in the Mother-Child Program.

When she started the program, her score was 499. After only 7 months, it rose to 590, chiefly through rent reporting done by Amos House. As McKeon pays her rent, Amos House reports the transaction through Esusu, a secure data processing and storage platform that reports rental payment information to credit bureaus on a monthly basis.

“I check it all the time and the number keeps going up – just from paying my rent on time for 7 months,” she said.

A good credit score can be a game changer. Credit scores can affect someone’s ability to get a loan, including how much interest is charged and how much it will cost. The lower the score, the more the borrower will pay. But it also can have a huge impact on employment, cell phone plans, insurance and cable rates, and even finding an apartment to rent. Sometimes landlords might require tenants pay a larger deposit, or get a cosigner if they see a low score, or they might even reject someone altogether.

Stephanie Jones-Pringle is a Financial Coach at Amos House and works one-to-one with clients to help them get on track.

“Some clients come to us without a credit score – or income beyond Social Security or Disability Insurance. Some have bad credit due to poor decisions, but are working their way up,” said Stephanie Jones-Pringle, a financial coach at Amos House. “The first thing we do is look to see what we can clean up and then go from there.” Even small improvements to a credit score can lead to big changes for clients.

Jones-Pringle works with clients to coach them through financial decisions. She takes them through credit reports, credit card balances, and ongoing bills. When it’s possible, errors are corrected on the reports. Paying bills on time has a big impact on improving scores.

Every month, Pringle-Jones reports the rental payments – or non-payment if that were the case – to Esusu. They then report it to the credit bureaus to help tenants build and establish credit scores.

Esusu cofounders Samir Goel and Wemimo Abbey.

“Your credit score is essentially your lifeline in the US financial system, so if you don’t have good credit, it’s very hard to buy a home,” says Samir Goel, Co-founder of Esusu. “Home ownership has been the biggest driver of wealth in the US, but there is a systemic inequality that prevents marginalized people from owning a home. Your financial identity shouldn’t determine where you end up in life, but it does.”

“There are 45 million Americans that don’t have a credit score today,” said Abbey Wemimo, co-founder of Esusu. “If we can unlock over $3 Trillion in mortgages – that’s not only good for the American economy, it’s good for advancing and paving a permanent bridge to financial access and inclusion for everyone.”

Esusu also delivers the LISC Twin Accounts™ program for Financial Opportunities Centers (FOCs) across the country. LISC Twin Accounts was designed to help low- to moderate-income people build credit and save money at the same time. Participants are issued a 12-month, $300 loan that is immediately transferred into a “locked” savings account where it remains until the loan is paid off. Clients make monthly payments of $26.24, which are then reported to the major credit bureaus by Esusu.

LISC matches each monthly payment–dollar for dollar–as long as it paid on time. At the end of the loan term, participants who make 12 on-time payments have $300 in savings and $300 in matching funds. They also have improved credit, as the credit bureaus have 12 months of on-time payments reflected in a new credit score.

Financial security is a priority for McKeon. After just a few months on the rent reporting program, she is thrilled with the improvement. As a stay at home mom, it’s been a challenge to raise three boys on disability but she has always paid her rent on time and wishes she had known about this program sooner.

“I’ve had an apartment for 8 years straight,” she said. “Imagine what that would have done to my score.”