Credit Card Debt and Consumer Payment Choice: What Can We Learn from Credit Bureau Data?
Data from a credit bureau represent unbiased reporting by lenders, but the information doesn’t provide the type of insight about consumers that surveys can offer, such as demographic attributes, income and wealth, and perceptions and attitudes. The author therefore creates a merged dataset that combines information from the Survey of Consumer Payment Choice (SCPC) with Equifax credit bureau data. It includes consumers’ self-reported data on demographics, income, and preferences as well as unbiased Equifax information on their risk scores and credit card behavior. With this merged dataset, the author estimates the adoption and use of credit cards by people with various levels of risk score and by people with and without debt to evaluate the effect of debt on payment behavior.