Does Getting a Mortgage Affect Credit Card Use? Does Getting a Mortgage Affect Credit Card Use?

By Scott Fulford and Joanna Stavins

Buying a house and getting a mortgage for the first time change a household’s balance sheet and may leave the household exposed to other shocks. The authors examine how this large change in the household balance sheet affects credit card use. Studying the relationship between mortgage debt and credit card debt is essential for understanding how consumers treat various types of debt.

The literature on this topic includes very few studies that track the same consumers over time to analyze the relationship between changes in mortgage debt and credit card debt. The authors of this paper therefore employ a large panel of credit reports (the New York Fed/Equifax Consumer Credit Panel) that enables them to track those changes for a given individual upon the acquisition of his or her first mortgage. Because consumers may plan for years to buy a house, the authors examine credit card use during the period that precedes the acquisition of the mortgage as well as the period immediately around the acquisition and the period following it. They also look at how the 2007–2009 financial crisis may have affected the relationship between a mortgage acquisition and credit card use, and how credit risk scores may impact that relationship

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