How helping employees improve credit scores can improve your bottom line

‍Nearly 20% of Americans have a subprime credit score (defined as minimum of 580) as of August 2021, which makes their financial lives stressful and more expensive than it needs to be.  People with low credit scores are shut out of many credit opportunities or exposed to high and unsustainable interest rates. This leads to mental and physical stress, which impacts every element of their life. 

Employees who cannot access funds and financial help they need are at higher risk for absenteeism and an overall drop in work performance. They experience greater difficulty with events that would be manageable in a different economic climate, such as a car breaking down. Many even have medical needs that they put off until later, because of the potential for high medical bills. This can further contribute to absenteeism, employee turnover and increased healthcare costs for employers. Any of these situations can have a long-term negative impact on employees’ lives.

How improved credit scores reduce employee financial stress

Can an employer help employees improve credit scores? Will meeting those employees with subprime credit scores where they are in moments of crisis with holistic Financial Care  improve credit scores?

Brightside Financial Assistants work with employees to help them navigate all things money — including building credit scores.  We closely monitor how we reduce financial stress by improving access to credit, and in turn, improve employees’ ability to get to work and be productive.

Study: The correlation‍ between credit scores and workforce impact

From December 2019 through June 2020, credit scores of 4,855 employees at one corporation were tracked through credit reporting, to measure the impact of Brightside Financial Care services used by individuals who engaged Brightside services, compared to those who did not.

Clients that worked with a Brightside Financial Assistant across this seven month period focused on a variety of activities to improve their financial health, including:

  • Steps to solve short-term money needs
  • Consolidate debt
  • Examine spending habits
  • Start savings plans

All of these steps positively impacted their credit scores.

What the data surrounding the impact of Brightside  shows

Brightside reduced the amount of engaged employees with subprime scores by 34% in a six-month time period with Financial Care.

At the beginning of the research period, 93% of employees seeking help from Brightside were carrying subprime credit scores

By the end of the seven month period, only 61% of Brightside clients were still subprime, a reduction of 32 percentage points, or a 34% difference between December 2019 and June 2020. (You can download the full study here.)

Additional financial health improvements underlying these improved credit scores included:

  • Paying down credit cards:  Brightside clients paid down credit cards three times faster than their non-engaged co-workers
  • Reduction in debt in collections: Brightside clients paid down debt in collections at nearly five times the rate of non-users

These improvements contributed to the  credit score improvements noted above, and are indicators of increased stability and financial health in their own right.

 How Brightside can benefit employers and employees

As the study on employer-sponsored financial planning shows, working with a Brightside Financial Assistant has real impact in moving individuals’ credit above subprime levels.

When employees’ credit is no longer classified as subprime, they are less likely to be denied credit, and worry about whether they can access  healthcare in the event of an emergency.

In turn, improved credit scores above subprime status mean that employees can likely access better loans at more favorable interest rates. This ultimately reduces the likelihood that financial instability will negatively impact absenteeism, turnover, and  healthcare costs due to avoidance or delay of necessary care.

Employees with more financial freedom and reduced financial stress translates to a better life at work, and at home.

Learn more about how Brightside helps employers deliver these benefits for their teams.

This post originally published on November 11, 2020. It has been updated for relevance and clarity.