Give Yourself Credit: Co-Founders Work To Close The Information Gap
Most people get credit wrong.
Ricki Granetz Lowitz and Amanda Carney set out to change that.
As co-founders of Working Credit NFP, a nonprofit organization that provides education, one-on-one credit building counseling and financial products as an employee benefit to corporate clients engaging with 12,000 employees around the country, Lowitz and Carney say soon their expansion will reach 70,000 employees.
“We are the missing piece in the benefits package,” says Lowitz, CEO of Working Credit and the Urban Institute’s 2018 Janice Nittoli Fellow, who co-founded the organization in 2014 with Carney, who serves as president.
“Credit is elastic and you can build it and improve it,” says Carney. “You just have to know the rules and they are not intuitive.”
Both Lowitz and Carney met in Chicago in the 1990s working for Local Initiatives Support Corporation (LISC).
Lowitz, a graduate of New York University in 1983, began working in New York teaching skills classes as part of welfare reform initiatives from the city. She crafted neighborhood-focused employment initiatives for the Comprehensive Community Revitalization Program (CCRP) in the South Bronx, before earning her Masters in Public Policy from Columbia University in New York in 1994.
Arriving in Chicago in 1996, Lowitz served as Director of Economic Opportunities for LISC, and created the organization’s first network of Financial Opportunity Centers—a model LISC replicated in 13 U.S. cities, and for which LISC received a federal Social Innovation Fund award in 2010. She also developed Twin Accounts, a credit building and savings product.
Carney, a 1985 Princeton University graduate, worked in Washington D.C. on community development in the late 80s and then moved to Chicago, earning her MBA from Northwestern University’s Kellogg School of Management in 1991.
Carney, later named an Aspen Institute Leadership Fellow, began working in 1991 at LISC, where she launched the New Communities Initiative in 2000, which caught the attention of the MacArthur Foundation in 2002, yielding a $50 million investment in the expansion to 16 Chicago neighborhoods, and the replication of the model across LISC’s 32-city landscape.
“We realized this credit building piece would help so many people but if we waited for them to come to us in a social services setting, they would already be in crisis,” Lowitz says.
The mission is to educate everyone as part of their employment.
In this country, 46 percent of adults living in low-income neighborhoods do not have a FICO credit score, and an additional 38 percent of Americans have poor credit. With the help from Working Credit, within six months, someone could achieve a better credit score and reap the benefits associated with good credit—home ownership, car loans, quality rental housing and more.
“The average American has a credit card balance of $6,375, according to a study by Experian. This debt has climbed 3 percent from a year ago, and interest rates on credit cards have increased since then, as well. The national average APR is over 16 percent, up a percentage point from 2017, according to CreditCards.com,” reports CNBC.
“We look at the data and the outcomes and it is so powerful in terms of helping people and financial inclusion,” Carney says. “We knew we were sitting on outcomes that would save people’s lives.”
One of the initial investors in Working Credit was Citibank, with more than $800,000 in investment to date, along with grants, foundation philanthropy and earned income so that by 2021, Working Credit will be self-sustaining.
With a combined tenure of 50 years working in poverty alleviation and community development, the co-founders understood the struggles of low income communities and credit, but also saw their solutions as applicable to all employees everywhere.
“The sell is easier than we thought,” Lowitz says, as human resources personnel deal with the financial difficulties that employees face.
“Over 70 percent of the people we work with are women,” says Carney. “Many of these women are great money managers,” but they simply do not understand solutions to credit problems.
“The more we tell them how the credit system works, they do get it and start making changes,” she says. “We are closing the information gap.” She adds, “This is less about gender and more about information.”
Lowitz adds, “Responsible women are paying more for everything and running households but don’t have the information.”
Once a company is a Working Credit client, Carney says employees attend a workshop, then it is followed up with one on one counseling. “Everyone leaves with a plan,” she says.
Some of the major takeaways from Working Credit include that if you stay below 30 percent of your credit card limit, you will see a 40 to 50 point bump in your credit score. Also, anyone can build credit, if you just pay your loans and credit card bills on time, plus keep your credit card utilization low.”
“You will not have a credit score unless you have at least one loan or one credit card,” Lowitz says. “And people take pride in not having loans and credit cards.”
She adds that it doesn’t matter if you have a $300 or $300,000 loan, you just have to pay on time. “You can have minimum wage and a 700 credit score. It is the act of paying things back,” that will help you.
According to Forbes, “While women and men are equally focused on day-to-day financial planning like viewing checking account balances, and developing or revising budgets, fewer women than men put money in a retirement savings account (39 percent vs. 58 percent) or emergency fund (41 percent vs. 53 percent). This makes sense as many women are focused daily on successfully managing their household and family activities, plus community and other commitments.”
Jennifer Halloran, Head of Community Responsibility and Brand at MassMutual writes in Forbes, “Paying down debt, and paying bills on time, can have the biggest impact on credit. Women should establish good credit for their family – and themselves – to build financial independence. Our research uncovered that fewer women than men are paying down credit card debt (57 percent vs. 63 percent) at least monthly and millennial women, in particular, lag in paying down student loans (28 percent vs. 38 percent of men.)”
“There is a lot of talk about fin tech solutions,” Lowitz says, “but what we find is that credit and finances are so emotional and people come in and feel like there is nothing they can do.”
After the sessions, Lowitz says, she can see the posture changes of those in the room.
“We are not judgmental, we don’t care what has happened in the past. Here is the fastest path to use to lower your expenses,” Lowitz says.
“Almost universally people aspire to homeownership.” Carney says. “Credit is the way in.”
She adds, “This is the opportunity of credit building. When we meet with employees, there is a sense that financial systems are rigged against them. But there is enormous opportunity. That is one of the really surprising things.”
About the Author
Michele Weldon is editorial director of Take The Lead, an award-winning author, journalist, emerita faculty in journalism at Northwestern University and a senior leader with The OpEd Project. @micheleweldonwww.micheleweldon.com