How to improve your bottom line by helping your employees improve their credit scores

Employee Access to Credit Can Impact Work Outcomes 

Among the many issues caused by the COVID pandemic, one of the most pressing is the need for employees to be able to access credit in order to meet unexpected expenses and financial challenges. Prior to COVID-19, 35% of Americans had a subprime credit score, 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 compounds their stress, and can have a direct impact on their ability to work well and take care of their families.

Specifically, 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 — and in this time of crisis, many people are experiencing one or more of these challenges.

A Fidelity Study on Financial Stress and Employee Performance

A Total Well Being Survey conducted by Fidelity Investments, Cornell University, and the Stanford Center on Longevity in 2018 showed that even before COVID, financial stress is directly related to workplace performance. The survey analyzed responses from 9,315 workers across the United States, including millennials, Gen Xers, and Baby Boomers. The study showed that employees struggle the most with financial health (debt, savings, insurance, and budgeting) — with 42% falling into the “unwell” category. The study further found that employees with the highest levels of debt have twice the absenteeism of those with the lowest levels. This debt contributes to the poor credit scores, and can be reduced with financial care assistance, as shown in our findings below. 

Reducing Stress, Improving Access to Credit

At Brightside, we work with employees to help them navigate all things money — including building credit scores.

In recent months, we have taken a close look at how we are able to reduce financial stress by improving access to credit, and so improve employees’ ability to get to work and be productive. Can an employer meet employees with subprime credit scores where they are, in moments of crisis, and offer true Financial Care that helps improve their credit scores? We took a look at the data, to find out.

Real changes in an employee’s life

Some of the financial health improvements underlying these improved credit ratings include:

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

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

What We Learned, and How It Can Benefit You

As the data shows, working with a Brightside Financial Assistant has real impact on moving individuals’ credit above subprime levels. When employees’ credit is no longer classified as subprime, they are less likely to receive credit denials, not be worried if they can access healthcare in the event of an emergency, or effectively increase their take home pay by avoiding expensive loans.

When they leave subprime status, employees can access better loans at more favorable interest rates. And when employees have more access to debt and see more savings in their bank account, this reduces the likelihood that financial instability will negatively impact their absenteeism, turnover, and even healthcare costs due to avoidance or delay of necessary care.

More financial freedom and reduced financial stress — this translates to a better life at work and at home. Want to find out more?  Contact us today.

More on Methodology

To better understand the correlation between credit scores and workforce impact, we examined a population of 4,855 employees at one corporation, over the period December 2019 through June 2020. Credit scores were tracked through credit reporting, which showed  the impact of Brightside services when we compared individuals who engaged Brightside services to those who did not.

Those who worked with a Brightside Personal Financial Assistant across this seven month period focused on a variety of activities to improve their financial health. They took steps to solve short-term money needs, consolidate debt, examine spending habits, and start savings plans, among others — all of which positively impacted their credit scores.

At the beginning of the research period, 93% of employees seeking help from Brightside were carrying subprime credit scores. By the end of the period, only 61% were still subprime, a reduction of 32 percentage points, or a 34% difference between December 2019 and June 2020, as referenced in the chart. Download the full study HERE.

A study showing reduction in employees with subprime scores for engaged clients