Part I: The Case for Helping Prisoners and Returning Citizens Build Good Credit


Marlysa Thomas is a program manager at the Corporation for Enterprise Development, where she builds capacity in non-profits that work directly with low-income communities. She specifically focuses on narrowing the racial wealth divide, and believes that part of narrowing this divide requires that we also financially empower formerly incarcerated individuals. This article originally appeared on CFED’s Inclusive Economy blog, which you can read here.


As President Obama pointed out last week in his speech to the NAACP, the United States is starting to acknowledge the gross inequities in our criminal justice system. There are currently over 2.2 million individuals incarcerated in the US today, and 60 percent of them are Blacks and Latinos. Today, more than 650,000 individuals return to society from federal and state prison each year, and this number is expected to rise with new reform. However, there are myriad barriers that make it hard for returning citizens—formerly incarcerated individuals—to integrate back into society. These barriers include being denied housing and employment and are compounded by the need to pay outstanding court fees and other bills.

If you don’t have a job, you can’t pay these bills. But how do you get a job? Is it as simple as having the technical skills or job training? No—there are still barriers like ‘checking the box’ that asks if you have a criminal record. But is it as simple as just banning the box, then? No, because while some states have made this decision, we still see significant numbers of returning citizens in these states being denied access to employment. Banning the box is just one barrier—not the only barrier. Credit is the hidden elephant in the room that we seldom consider when we think about supporting returning citizens, yet it is a factor that we must address to help eliminate some of the immediate burdens that returning citizens face upon being released.

Why should we be thinking about credit for returning citizens? How important can credit really be? And don’t they have bigger things to worry about than credit? These are really important questions, which can be answered by turning our attention to what’s happening during the time an inmate is in custody. He or she is not an active member of society and therefore is not keeping his or her finances active. Without being able to rent an apartment, use a credit card or pay utility bills, there are no opportunities for inmates to build, or even establish, credit. More often than not, this financial inactivity contributes to sharp declines in credit for the incarcerated population. In addition, most inmates have bills that become outstanding during their time in custody, and these bills often end up going to collections. So, more often than not, former inmates return to society with very low credit or no credit at all.

In a society where credit is the doorway to opportunity, having poor or no credit can prove detrimental. Let’s think about the population that is disproportionately represented in these institutions—people from low-income backgrounds and communities of color—a population with the highest unbanked rates according to a study by the FDIC. This means that when inmates enter jail or prison, most of them are already living on the fringes of financial mainstream and walking in with poor credit.

Once they are released, returning citizens are required to pay court fees and other bills like child support and find secure housing. To cover these expenses, returning citizens would need to get a job that can generate enough income—but since many individuals are denied employment due to poor credit history, getting a job is an uphill battle. When the three out of the four major things that former inmates need (employment, housing, debt-reduction and counseling) to meet these legal obligations are in some way contingent on credit, and many returning citizens have poor or no credit, then it is understandable why many former inmates recidivate.

I would advocate for integrating credit building not only into reentry programming upon release, but also while inmates are still incarcerated. Helping inmates establish good credit while incarcerated, or at the very least, teaching them how to improve their credit after release, will help to jumpstart their success.

A credit-building program at LISC Chicago improved the credit of financially vulnerable individuals at the end of the program, and then individuals used these improved credit scores to get jobs and move into higher-quality apartments. If credit building were offered during incarceration and the reentry process, then returning citizens—whose credit profiles are generally similar to those of the LISC study participants—would have a chance to improve their credit scores and maximize the payoff of the job training offered in reentry programs.

Without integrating credit-building during incarceration and reentry, returning citizens risk only receiving short-term successes, such as acceptance into transitional housing without securing a permanent place to live, and not achieving long-term financial stability.