Building Credit: A Gateway to Financial Well-being

Having a low credit score or a lack of documented credit history can create a vicious cycle of shutting consumers out of opportunities for lending, housing or employment. That in turn makes it harder or even impossible to purchase the assets that lead to long-term financial well-being.

Credit history is an indication of how a person has managed debt in the past, and many companies use it to predict an individual’s future financial behaviors. Good credit history may improve a person’s ability to borrow money, get a credit card, receive a mortgage or auto loan or rent an apartment.

 According to a recent report by Oliver Wyman, an estimated 28 million Americans are credit invisible — meaning they do not have a credit history with one of the nationwide credit reporting agencies.

• An additional 21 million are “unscorable,” which means their credit file is thin, either with insufficient credit history or a lack of any recent credit history.

What Is the Capital One Credit Building Program and How Does it Work?

In collaboration with community partners across the U.S., Capital One’s Credit Building Program helps to connect individuals to effective products and resources that empower people to save money, build credit and manage debt.

One such partner is Branches, a Miami, FL-based nonprofit organization that specializes in offering financial well-being services to the families they support — many of whom are immigrants seeking to begin their credit building journey.

For nearly 50 years, the organization has seen firsthand how securing community members' access to credit paves the way to long-term financial wellness for their families.

"Many first-generation immigrants have to learn by mistakes as they confront cultural barriers that prevent individuals from building credit, including a U.S. credit system that is uniquely complex," says Karla Bachmann, Vice President of Financial Wellness at Branches. "Our organization works to raise awareness of the available products and tools that support families in our community as they navigate a path to sound credit and firm financial footing.”

How Capital One Supports Credit Building

Capital One’s Credit Building Program is a bridge between our partners and product solutions that help build financial resiliency through partnerships with Credit Builders Alliance (CBA) and Justine Petersen (JP).

This program helps to build the capacity of nonprofit partners to integrate credit building loans through programs such as JP’s Save2Build product, in which an individual makes fixed payments to a lender and then gains access to the loan amount at the end of the loan's term.

Additionally, investing in our nonprofit partners enables us to better reach traditionally underserved communities with credit building products, such as our secured card. A secured credit card opens up access for people who are establishing, building or rebuilding their credit. Building credit through responsible use can make people better candidates for things like mortgages, car loans and other credit cards.

Capital One's Credit Building Program is part of the Capital One Impact Initiative — an initial $200 million, multi-year commitment that strives to advance socioeconomic mobility. Launched in October 2020, the Capital One Impact Initiative seeks to create a world where everyone has an equal opportunity to prosper through advocating for an inclusive society, building thriving communities and creating financial tools that enrich lives.

Supporting the Unique Credit Needs of Each Community

Participants of this program also receive support, such as financial education and coaching, to best support financial resilience. In 2022, a total of 24 organizations across the U.S. are participating in the program and will have opportunities to share best practices with each other.

That includes Haven Neighborhood Services, a Los Angeles, CA-based organization that focuses on creating programs that address its clients’ specific financial obstacles and credit needs. Capital One’s Credit Building Program has supported the credit needs of this community by helping improve Haven’s clients’ credit scores, encouraging them to bank and adopting good-savings habits.

“The chronic financial instability of our clients imposes high degrees of day-to-day stress, and limits our clients’ ability to improve their overall financial outlook,” says Erika Toriz, Founder and Executive Director of Haven Neighborhood Services. “This is certainly true among our immigrant communities, especially those who have moderate-to-high rates of income volatility, distrust of banks, anxiety regarding bank account fees and those deemed credit invisible.”

Haven Neighborhood Services strives to integrate effective financial capability, housing and supportive services to develop and advance economic inclusion, mobility and financial security to permanently remedy their clients’ financial and housing insecurity.

“As a solution-focused and inclusive product, the Save2Build loan has helped our clients meet their credit objectives with the support of our financial coaches who give individuals a step-by-step process to take control of their financial success,” says Erika Toriz, Founder and Executive Director of Haven Neighborhood Services. “The trust we have built allows us to introduce these products alongside financial education to set our clients up for success as they start to build credit — many for the first time. Capital One’s Credit Building Program allows us to do this and aligns well with our mission.”