CreditSmart®: Ten Years Past, Ten Years Forward
Ten years ago this week, Freddie Mac launched CreditSmart®, a comprehensive, multilingual financial literacy program. Not only has CreditSmart achieved a decade of success in communities across the country, it has become a signature Freddie Mac resource many have come to depend on.
Since its official launch on July 26, 2001, some 40,000 trained instructors have used CreditSmart to teach more than 3 million Americans in 44 states how to responsibly manage their money, build stronger credit, and make wiser financial decisions.
CreditSmart is widely accepted as the financial education tool of choice of major lenders, civil rights and consumer organizations, and trade associations. Specifically, CreditSmart has been used by JPMorgan Chase, Bank of America, the National Urban League, National Council of La Raza, United States Hispanic Leadership Institute, Asian Real Estate Association of America, and others. CreditSmart has also been used by the Coast Guard, as well as PBS’s Moneywise, and has aired on 172 PBS stations and the Armed Forces Network.
Ten Years of CreditSmart
- CreditSmart launches in 2001
- CreditSmart Español in 2002
- CreditSmart Asian in 2007
- Instructor Training Webinar series in 2008
- "Get the Facts" YouTube series in 2011
In many ways, CreditSmart is successful because we developed it with the help of the people it was created to serve. We started by surveying 24,000 low- to moderate-income consumers on their credit habits. Then we collaborated closely with five Historically Black Colleges and Universities plus key community leaders, universities, and organizations. We conducted focus groups to fine-tune CreditSmart so it spoke in the community’s own language.
To make CreditSmart more accessible, we made it available through sources that were already known and trusted in local communities, such as churches, universities, and non-profit community groups. This brings us to the second key reason for its success: CreditSmart is accessible and flexible.
When CreditSmart began, it was available in one language: English. Today, it’s offered in four more: Spanish, Korean, Vietnamese, and Chinese. We also made CreditSmart flexible enough for trainers to use in a variety of venues, from full-time classes to targeted tutoring sessions for working people on tight schedules. The result has been a nimble, comprehensive, flexible curriculum that is accessible to a wide spectrum of America’s working families, especially those in historically underserved communities.
Finally, we designed CreditSmart to go beyond the expected menu of homebuying topics (mortgages, closings, etc.) to address all of the personal financial skills needed to budget household income, control spending, build strong credit, avoid fraud artists, and succeed as a long-term homeowner.
CreditSmart is poised for future success for at least two reasons. First, Americans are thirsty for knowledge and understanding about consumer credit and mortgage finance. That was true when we announced CreditSmart in 2001 – and ten years later, I believe it is still unassailably true. What’s more, the public’s thirst for sound credit information has only increased since the housing collapse of 2008.
The housing crisis has also strengthened the business case for CreditSmart and borrower education. We see new attention being paid to research linking financial literacy to loan performance, such as a 2009 study of high-risk Illinois borrowers that associates pre-purchase counseling with a 30-percent drop in defaults.
At the same time, an emerging body of post-housing bubble research shows delinquent borrowers who receive counseling are more likely to stay current on a modified loan. In fact, 55 percent of the borrowers who received counseling were able to successfully climb out of foreclosure, versus only 38 percent of the borrowers who didn’t receive counseling, according to an Urban Institute analysis of 2008-09 foreclosures.
As CreditSmart’s second decade begins, we’re expanding its availability to a group of vulnerable – but often overlooked – citizens: high school students. The United States Hispanic Leadership Institute already has incorporated CreditSmart training into the leadership conferences it offers to high school and college students in 25 states. Other initiatives targeting high school students are going forward in Chicago and Atlanta, and in Washington, DC, the public schools will team up with the GALA Hispanic Theatre and other nonprofit organizations to teach students about credit and money management.
These exciting new initiatives underscore both CreditSmart’s flexibility and its capacity to equip entire communities with sound financial education and serve the program’s core mission: to prepare America’s next generation of homeowners for long-term success.
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