Why Credit Scores and Payday Lending Matter for Health


Kirsten Wysen, MHSA, Public Health – Seattle & King County

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October 3, 2019

Greater inclusion in affordable credit markets and other policies that protect consumers from high cost debt could improve both the financial well-being and physical health of millions of adults. Public health and racial equity lenses are valuable tools for analyzing credit score and personal loan systems and related health implications for low-income people in urban and rural areas. Nineteen percent of American adults have no credit score. This group is disproportionately comprised of people of color and rural residents. An estimated one quarter to one third of these 45 million adults along with the 5 million more with scores under 500 use alternative financial services credit, such as payday or other short-term high interest loans with interest rates from 100% to 677% or higher. New epidemiologic evidence has shown strong connections between exposure to high cost short-term debt and poor health. This paper summarizes what is known on this topic and potential solutions. Those concerned with improving the health and well-being of low-income people and places can make progress faster by considering both the health benefits that come from increasing access to affordable credit and the possible harms to health associated with exposure to high cost short-term loans.