Bending Toward Justice: Credit Scores as Measures of CDFI Impact

Originally published in 2020

Introduction

Identifying and demonstrating CDFI impact has been elusive since the formal establishment of the industry in 1994. While it has often been hypothesized that a marker of CDFI success and impact would be for CDFI borrowers to “graduate” to working with traditional financial institutions, there has been little progress in supporting this and other claims. While such outcomes may be present across CDFI lending products, this research project focuses on the effects on credit scores of consumers accessing small dollar credit building loans (SDCBLs). Through this work, FUND Community Institute (FUND CI) and Credit Builders Alliance (CBA) reviewed data to test this claim, including credit score data collected from CDFIs as well as interviews with CDFI practitioners. The intent is for this work to be useful to CDFI practitioners in designing, administering, and tracking SDCBLs as well as to foundations and other funders of the industry in strategically targeting support

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