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Loan Products for Credit-Building: An Impact Analysis of Twin Accounts

Low-income people often find that poor credit scores, or no scores at all, prevent them from obtaining affordable consumer credit. Organizations that help people improve their financial well-being overall often focus on improving their credit. One increasingly popular way to do this is to put clients into specialized loan products that help people build credit in ways recognized by agencies that construct and assign the scores.

Beginning in 2010, the Local Initiatives Support Corporation, with the input of many of its partners–created and piloted a credit building loan product called Twin Accounts, which includes a one-to-one match to client repayments as an incentive to on-time payment. Several years later, LISC was able to expand this product through its national Financial Opportunity Center network, through its CDFI partner–Justine PETERSEN. This paper compares the outcomes of Twin Accounts borrowers with other, statistically-matched, clients of LISC-supported Financial Opportunity Centers who did not open such accounts to find out whether their scores, in fact, improved.

Results show that financial coaching, when paired with access to financial products, has a large impact on credit scores and credit building behaviors. Participants in Twin Accounts had double the credit score gain of non-participants in Twin Accounts and were more than twice as likely to gain a score and keep it (98 percent versus 36 percent in the comparison group). On average, Twin Accounts participants increased their credit score by 35 points, compared to a 10 point increase for non-borrowers.

In addition, participants in the credit builder loan had higher six- and twelve-month employment retention rates, perhaps indicating a greater ability to weather financial crises or stronger connection to all FOC services including employment counseling. The findings of this analysis provide support for the continuation and expansion of the Twin Accounts program.


We owe a special thanks to MetLife Foundation for the funding support they provided.

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