Credit Scores and Inequality across the Life Cycle

Satyajit Chatterjee (), P. Dean Corbae, Kyle Dempsey and José-Víctor Ríos-Rull

No 34027, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Credit scores are a primary screening device for the allocation of credit, housing, and sometimes even employment. In the data, credit scores grow and fan out with age; at the same time, income and consumption inequality also increase with a cohort’s age. We postulate a simple model with hidden information to explore the joint determination of credit scores, income, and consumption over an individual’s lifetime which can replicate these empirical facts. We use the model to understand the role of technologies like big data or legal restrictions limiting information on certain adverse events like medical expenses intended to increase credit market access.

JEL-codes: D82 E21 G51 (search for similar items in EconPapers)
Date: 2025-07
Note: EFG
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Chapter: Credit Scores and Inequality Across the Life Cycle (2025)
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