Building wealth and health: Under Kaiser’s credit building program

Kaiser Permanente is several months into a first-of-its-kind community program that focuses on helping Americans build their credit.

When researching various social barriers to health, Kaiser realized that factors that negatively impact Americans’ financial mobility needed to be addressed, according to Stephanie Ledesma, the health system’s vice president of national community health. Economic mobility is linked to health because without it, people often struggle to live healthy lives, she pointed out in a recent interview.

“When you don’t have access to financial security, you don’t have access to healthy foods, or maybe even experiencing homelessness or something like that, it really affects your ability to be healthy and well — you’re just not focused on those things when you can’t put food down on the table,” Ledesma said.

Kaiser identified rent reporting — which refers to reporting on-time rent payments to the credit bureaus — as a way it can help increase people’s financial mobility by building good credit.

Going this route, Kaiser seems to be the first health system to launch a program focused on building Americans’ credit. Until now, health systems and payers have focused on other social factors that determine health—whether by providing access to transportation, addressing food insecurity, or connecting patients to community resources.

It’s no secret that home ownership is become increasingly challenging in the US, and it’s an even more distant dream for individuals who are hiring or unable to demonstrate good credit. People with no credit or bad credit can pay much more for the same services than someone with good credit — in fact, bad credit costs low-income Americans an average of $200,000 over their lifetime, according to Alliance of Credit Builders.

When homeowners pay their mortgage on time, they build credit. But most tenants don’t have that option when paying on time. To address this problem, Kaiser launched its credit building program in September. Over the next two years, Kaiser has pledged $450,000 in funding to help 60 to 80 organizations offer rental reporting and other credit-building programs to low-income people across the country. It has already distributed funds to nine organizations, according to Ledesma.

As part of the program, Kaiser has partnered with the Credit Builders Alliance, an organization that increases Americans’ access to rental reporting services. Through this partnership, Kaiser and the alliance give housing providers the ability to report timely credit scores to the credit bureaus, allowing tenants who make on-time payments to build credit.

“We recognize that credit, for all intents and purposes, is really essential to economic security and mobility,” Ledesma said. “Being able to have rental reporting as part of your credit score just feels like a really great opportunity for us to be able to unlock options that wouldn’t have been available to people before.”

By building better credit, renters will be able to qualify for loans that can help them achieve things like owning a home, starting a business or going to school, she pointed out.

One of the housing providers Kaiser has provided funding to is Colorado-based Neighbor to Neighbor. Through the grant, the organization can now cover rent reporting fees and provide more financial education materials to its tenants. Programs like this help break intergenerational cycles of poverty, which are often linked to credit, financial literacy and access to homeownership, Kristi Hayes, Neighbor to Neighbor’s director of community operations, said in a statement.

Ledesma believes other health systems have an opportunity to step into this space as well.

“We’re actually finding that when we can partner with other health systems, bigger things and bigger impact can happen,” she said. “We welcome the thought that other health systems will do the same or also start the same types of programs.” We hope that our participation can be somewhat of a catalyst for others to join.”

Photo: Ta Nu, Getty Images

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