Credit Report Data Research Articles

Life after (soft) default

Soft default, defined as a delinquency of 90 days or more, is a relatively common event in the credit market, in 2010 such episodes affected about 3 million individuals. Yet we lack a detailed understanding of what happens afterward. We use credit report data, on approximately 2 million individuals from 2004 to 2020, to shed light on individual trajectories after such event, and document enduring negative impacts. These effects persist for up to ten years post-event and manifest in lower credit scores, reduced total credit limits, lower homeownership rates, lower income, and relocation to less economically active zip codes. It appears that those who are overextended in their mortgage lines, and with larger delinquent amounts, suffer the harshest consequences.

Deleting a Signal: Evidence from Pre-Employment Credit Checks

Abstract We study the removal of information from a market, such as a job-applicant screening tool. We characterize how removal harms groups with relative advantage in that information: typically those for whom the banned information is most precise relative to alternative signals. We illustrate this using recent bans on employers' use of credit report data. Bans decrease job-finding rates for Black job-seekers by 3 percentage points and increase involuntary separations for Black new hires by 4 percentage points, primarily because other screening tools, such as interviews, have around 60% higher standard deviation of signal noise for Black relative to white job-seekers.

Associations between a Novel Measure of Census Tract-Level Credit Insecurity and Frequent Mental Distress in US Urban Areas, 2020.

Access to and utilization of consumer credit remains an understudied social determinant of health. We examined associations between a novel, small-area, multidimensional credit insecurity index (CII), and the prevalence of self-reported frequent mental distress across US cities in 2020. The census tract-level CII was developed by the Federal Reserve Bank of New York using Census population information and a nationally representative sample of anonymized Equifax credit report data. The CII was calculated for tracts in 766 cities displayed on the City Health Dashboard at the time of analysis, predominantly representing cities with over 50,000 residents. The CII combined data on tract-level participation in the formal credit economy with information on the percent of individuals without revolving credit, percent with high credit utilization, and percent with deep subprime credit scores. Tracts were classified as credit-assured, credit-likely, mid-tier, at-risk, or credit-insecure. We used linear regression to examine associations between the CII and a modeled tract-level measure of frequent mental distress, obtained from the CDC PLACES project. Regression models were adjusted for neighborhood economic and demographic characteristics. We examined effect modification by US region by including two-way interaction terms in regression models. In adjusted models, credit-insecure tracts had a modestly higher prevalence of frequent mental distress (prevalence difference = 0.38 percentage points; 95% CI = 0.32, 0.44), compared to credit-assured tracts. Associations were most pronounced in the Midwest. Local factors impacting credit access and utilization are often modifiable. The CII, a novel indicator of community financial well-being, may be an independent predictor of neighborhood health in US cities and could illuminate policy targets to improve access to desirable credit products and downstream health outcomes.

Association between pre-diagnosis financial strain and later stage cancer presentation.

127 Background: Poverty and community-level deprivation have been shown to be associated with later stage cancer diagnosis. However, few studies have used objective financial data to study the link between individual financial strain and cancer stage at diagnosis. Our goal was to assess the associations between pre-diagnosis financial strain (FS) as measured by credit reports and later stage cancer diagnosis. Methods: Records from cancer patients diagnosed with solid tumors between 2014 and 2018 from the Western Washington SEER cancer registry and quarterly credit report data from a large credit-reporting agency TransUnion were linked and deidentified. Patients diagnosed with late-stage cancer (stages III and IV) were matched 1:1 to patients diagnosed with early-stage cancer (stages I and II) by age, year of diagnosis, cancer type, and insurance status. We assessed the association between FS (defined as any records of third-party collections, charge-offs, delinquent mortgage payments, tax liens, foreclosures, repossessions, and bankruptcies within 2 years prior to diagnosis) and late-stage diagnosis using conditional logistic regression to account for matching, adjusting for race, sex, marital status, area deprivation, and rurality. We performed stratified analyses by insurance enrollment. Separately, among a subset of unmatched insured breast cancer patients eligible for cancer screening (ages 50-74), we used multivariable logistic regressions to exam how the nonreceipt of screening mammography within 2 years of diagnosis mediated the relationship between FS and late-stage diagnosis. Results: After matching, 27916 patients were included in the analysis (mean age 66, 47% female, 84% White race, 7% Asian or Pacific Islander, 4% Black, and 3% Hispanic). Almost one in three patients (32%) had experienced FS before diagnosis. FS was associated with higher odds of late-stage cancer diagnosis (adjusted OR, aOR 1.18, 95%CI 1.1-1.3), and this association remained significant among insured patients (aOR 1.13, 95%CI 1.03-1.2). Among a subset of insured breast cancer patients (n=6934), FS was associated with nonreceipt of mammography (aOR 1.88, 95%CI 1.5-2.4). The association between FS and late-stage diagnosis became insignificant after we accounted for nonreceipt of mammography (aOR reduced from 1.65 (95%CI 1.4-1.9) to 1.04 (95%CI 0.8-1.4)). Conclusions: FS is associated with a later stage cancer diagnosis, which could in turn lead to adverse cancer outcomes. Among breast cancer patients, this association can be largely explained by nonreceipt of mammography. Our findings suggest that even with insurance coverage, individual’s financial stress may create an additional barrier to timely medical attention for suspicious cancer symptoms or routine screening, further exacerbating cancer disparities. This research highlights the need to develop strategies to improve access to care for these individuals.

Patient adverse financial outcomes before and after COVID-19 infection.

Adverse financial outcomes after COVID-19 infection and hospitalization have not been assessed with appropriate comparators to account for other financial disruptions of 2020-2021. Using credit report data from 132,109 commercially insured COVID-19 survivors, we compared the rates of adverse financial outcomes for two cohorts of individuals with credit outcomes measured before and after COVID-19 infection, using an interaction term between cohort and hospitalization to test whether adverse credit outcomes changed more for hospitalized than nonhospitalized COVID-19 patients. Covariates included age group, gender, and several area-level social determinants of health. Adverse financial outcomes were significantly more common after COVID-19 infection than before COVID-19 infection, with greater increases among those hospitalized with COVID-19 (5-8 percentagepoints) than among nonhospitalized patients (1-3 percentage points). Future work examining longitudinal financial outcomes before and after COVID-19 infection is needed to determine the causal mechanisms of this association to reduce financial hardship from COVID-19 and other conditions.

The Economic Consequences of Being Denied an Abortion

This paper evaluates the financial and economic consequences of being denied an abortion. We link credit report data to the Turnaway Study, which collected high-quality, longitudinal data on women receiving or being denied a wanted abortion in the United States. We compare financial outcomes over a ten-year period for women who had pregnancies just above and below a gestational age limit allowing for a wanted abortion. Outcomes evolved similarly for the two groups prior to the abortion encounter. Following the encounter, women who were denied an abortion experience a large increase in financial distress that remains for several years. (JEL G51, I18, J13, J16)

256: FAMILY FINANCIAL HARDSHIP BEFORE AND AFTER PEDIATRIC CRITICAL ILLNESS

Introduction: Little is known about caregiver financial hardship before versus after a child’s Pediatric Intensive Care Unit (PICU) hospitalization. Methods: We used a novel dataset linking statewide commercial insurance claims to cross-sectional commercial credit data. Using validated revenue codes, we identified PICU hospitalizations (age ≤18 years) in January-June 2020 and January-June 2021. Caregivers of these children were identified as adults listed as the primary plan holder or spouse of the primary plan holder. Financial measures in January 2021 assessed pre-PICU status in the January-June 2021 cohort and post-PICU status in the January-June 2020 cohort. Financial measures included delinquent debt, debt in collections by type (medical and non-medical), low credit score(< 660), and financial hardship(composite of any outcome). Logistic and generalized linear regression models were used to compare caregiver financial status in the 2021 vs 2020 cohorts (pre- vs post-PICU). Models were adjusted for child’s age and comorbidity status, hospital length of stay, and household status (primary plan holder with a spouse on the plan; spouse; and primary plan holder with no spouse on the plan). Results: We identified 1038 caregivers for 608 children pre-PICU and 1092 caregivers for 631 children post-PICU. 99.8% (n=2,126) of caregivers were linked to their credit report data; 1035 pre-PICU and 1091 post-PICU caregivers. Post-PICU caregivers had higher adjusted odds of any delinquent debt [adjusted Odds Ratio 1.22; 95%CI 1.00-1.48; p=0.04]. Post-PICU caregivers had higher frequencies of medical and non-medical debt in collections, and low credit score, though not statistically significant. For those with delinquent debt, post-PICU caregivers had higher adjusted mean debt than pre-PICU caregivers ($3692 vs $2536, p< 0.01). Amounts of medical and non-medical debt in collections were similar. 45.7% and 49.8% of pre- and post-PICU families had any measure of financial hardship. Conclusions: Financial hardship is common in caregivers of critically ill children—present in nearly half before and after PICU hospitalization. While delinquent debt was higher after PICU hospitalization, medical debt in collections was similar pre- vs post-PICU, suggesting non-medical costs may be a key driver of financial hardship post-PICU.

Financial Outcomes After Traumatic Injury Among Working-Age US Adults With Commercial Insurance

This cross-sectional study links insurance claims and consumer credit report data to evaluate the experience of financial distress in commercially insured adults after traumatic injury.

What Determines Consumer Financial Distress? Place- and Person-Based Factors

Abstract We use credit report data to study consumer financial distress in America. We report large, persistent disparities in financial distress across regions. To understand these patterns, we conduct a “movers” analysis. For collections and default, there is only weak convergence following a move, suggesting these types of distress are not primarily caused by place-based factors (e.g., local economic conditions and state laws) but instead reflect person-based characteristics (e.g., financial literacy and risk preferences). In contrast, for personal bankruptcy, we find a sizable place-based effect, which is consistent with anecdotal evidence on how local legal factors influence personal bankruptcy. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Predicting mortality from credit reports

AbstractData on hundreds of variables related to individual consumer finance behavior (such as credit card and loan activity) is routinely collected in many countries and plays an important role in lending decisions. We postulate that the detailed nature of this data may be used to predict outcomes in seemingly unrelated domains such as individual health. We build a series of machine learning models to demonstrate that credit report data can be used to predict individual mortality. Variable groups related to credit cards and various loans, mostly unsecured loans, are shown to carry significant predictive power. Lags of these variables are also significant thus indicating that dynamics also matters. Improved mortality predictions based on consumer finance data can have important economic implications in insurance markets but may also raise privacy concerns.

Medicaid Expansion and Medical Debt: Evidence From Louisiana, 2014-2019.

Objectives. To identify the association between Medicaid eligibility expansion and medical debt. Methods. We used difference-in-differences design to compare changes in medical debt for those gaining coverage through Louisiana's Medicaid expansion with those in nonexpansion states. We matched individuals gaining Medicaid coverage because of Louisiana's Medicaid expansion (n = 196 556) to credit report data on medical debt and compared them with randomly selected credit reports of those living in Southern nonexpansion state zip codes with high rates of uninsurance (n = 973 674). The study spanned July 2014 through July 2019. Results. One year after Louisiana Medicaid expansion, medical collections briefly rose before declining by 8.1 percentage points (95% confidence interval [CI] = -0.107, -0.055; P ≤ .001), or 13.5%, by the third postexpansion year. Balances also briefly rose before falling by 0.621 log points (95% CI = -0.817, -0.426; P ≤ .001), or 46.3%. Conclusions. Louisiana's Medicaid expansion was associated with a reduction in the medical debt load for those gaining coverage. These results suggest that future Medicaid eligibility expansions may be associated with similar improvements in the financial well-being of enrollees.

What Determines Consumer Financial Distress? Place- and Person-Based Factors

We use credit report data for a representative sample of 35 million individuals over 2000-2016 to examine consumer financial distress in the United States. We show there are large, persistent geographic disparities in consumer financial distress, with low levels in the Upper Midwest and high levels in the Deep South. To better understand these patterns, we conduct a movers analysis that examines how financial distress evolves when people move to places with different levels of financial distress. For collections and default, there is only weak convergence following a move, suggesting these types of financial distress are not primarily caused by place-based factors (such as local economic conditions, loan supply, and state laws) but instead reflect person-based characteristics (such as financial literacy and risk preferences). In contrast, for personal bankruptcy, we find a sizable place-based effect, which is consistent with anecdotal evidence on how local legal factors influence the bankruptcy filing decision. Individual characteristics determine whether you get into financial distress, while place-based factors determine whether you use bankruptcy to get out.

Unlike Medical Spending, Medical Bills In Collections Decrease With Patients' Age.

Health policy is often designed to help protect patients' financial security. However, there is limited understanding of the role medical debt plays in household finances. We used credit report data on more than four million Americans to study the age profile of people whose medical bills were sent to a US collections agency in 2016. We found that, unlike health care use and spending, medical collections decreased substantially with age. The average size of medical debt decreased nearly 40percent from patients age twenty-seven to sixty-four, with increases in health insurance coverage and incomes likely playing important mediating roles. However, the frequency of medical collections-that is, the proportion of people with a collection by age-was less closely tied to insurance coverage rates. A potential explanation is that most medical collections were relatively modest in size, with more than half of them less than $600 annually. As a result, medical collections could still occur under typical insurance plans. We discuss how these results could inform policies targeting medical debt and insurance regulation, such as restrictions on age rating.

Credit Reports as RRsumms: The Incidence of Pre-Employment Credit Screening

We study recent bans on employers' use of credit reports to screen job applicants – a practice that has been popular among employers, but controversial for its perceived disparate impact on racial minorities. Exploiting geographic, temporal, and job-level variation in which workers are covered by these bans, we analyze these bans' effects in two datasets: the panel dimension of the Current Population Survey (CPS); and data aggregated from state unemployment insurance records. We find that the bans reduced job-finding rates for blacks by 7 to 16 log points, and increased subsequent separation rates for black new hires by 3 percentage points, arguably contrary to the bans' intended effects. Results for Hispanics and whites are less conclusive. We interpret these findings in a statistical discrimination model in which credit report data, more so for blacks than for other groups, send a high-precision signal relative to the precision of employers' priors.

Making Health Care Truly Affordable after Health Care Reform.

The Affordable Care Act (ACA) is an essential first step toward making health insurance more affordable for lower and moderate income Americans. It has accomplished historic reductions in the proportion of Americans who are uninsured. The number of Americans reporting delaying medical care for financial reasons has declined by approximately one-third since 2010. Medicaid expansions, in particular, have significantly reduced financial burdens and accompanying anxieties experienced by low-income Americans in states that have embraced this opportunity. 4 Consistent with these finding, one recent analysis of credit report data finds that Medicaid expansion was associated with between a $600 and $1000 decline in collection balances among individuals who gained coverage. Notwithstanding these gains, premiums and cost-sharing are still too high for many Americans. And cost-sharing has continued to edge higher for the majority of Americans who have coverage through employer-based plans. Measures to address these challenges must build on the ACA to provide greater protection to millions of Americans and to address continued dissatisfaction with our health care financing system among middle-income Americans.

The Impact of Housing Markets on Consumer Debt: Credit Report Evidence from 1999 to 2012

We estimate the response of consumer debt portfolios to pronounced housing market swings from 1999 to 2012 using Equifax‐sourced credit report data and a variety of identification approaches. We find: (i) the extraordinary climb in home equity debt from 2002 to 2006 is an expression of a stable, longer‐term relationship between house price growth and home equity borrowing; (ii) all preboom homeowners, and older and prime postboom homeowners, demonstrate near dollar‐for‐dollar substitution between (expensive) credit card and (cheap) home equity debt in response to home equity changes; and (iii) little evidence of substitution between home equity and student loan debt.

Sound credit scores and financial decisions despite cognitive aging

Age-related deterioration in cognitive ability may compromise the ability of older adults to make major financial decisions. We explore whether knowledge and expertise accumulated from past decisions can offset cognitive decline to maintain decision quality over the life span. Using a unique dataset that combines measures of cognitive ability (fluid intelligence) and of general and domain-specific knowledge (crystallized intelligence), credit report data, and other measures of decision quality, we show that domain-specific knowledge and expertise provide an alternative route for sound financial decisions. That is, cognitive aging does not spell doom for financial decision-making in domains where the decision maker has developed expertise. These results have important implications for public policy and for the design of effective interventions and decision aids.

State Mandated Financial Education and the Credit Behavior of Young Adults

In the U.S., a number of states have mandated personal finance classes in public school curricula to address perceived deficiencies in financial decision-making competency. Despite the growth of financial and economic education provided in public schools, little is known about the effect of these programs on the credit behaviors of young adults. Using a panel of credit report data, we examine young adults in three states where personal financial education mandates were implemented in 2007: Georgia, Idaho, and Texas. We compare the credit scores and delinquency rates of young adults in each of these states pre- and post-implementation of the education to those of students in a synthetic control state and then bordering states without financial education. We find that young people who are in school after the implementation of a financial education requirement have higher relative credit scores and lower relative delinquency rates than those in control states.

State Mandated Financial Education and the Credit Behavior of Young Adults

In the U.S., a number of states have mandated personal finance classes in public school curricula to address perceived deficiencies in financial decision-making competency. Despite the growth of financial and economic education provided in public schools, little is known about the effect of these programs on the credit behaviors of young adults. Using a panel of credit report data, we examine young adults in three states where personal financial education mandates were implemented in 2007: Georgia, Idaho, and Texas. We compare the credit scores and delinquency rates of young adults in each of these states pre- and post-implementation of the education to those of students in a synthetic control state and then bordering states without financial education. We find that young people who are in school after the implementation of a financial education requirement have higher relative credit scores and lower relative delinquency rates than those in control states.

The Effects of the Massachusetts Health Reform on Household Financial Distress

In this paper, we examine the effect of a major health care reform in Massachusetts on a broad set of financial outcomes using credit report data. We exploit variation in the impact of the reform across counties and age groups using pre-reform insurance coverage as a measure of the potential effect of the reform. We find that the reform reduced the amount of debt that was past due, improved credit scores, reduced personal bankruptcies and reduced third-party collections. Our results show that health care reform has implications that extend well beyond the health of those who gain insurance coverage. (JEL D14, G22, H75, I13, I18)