Consumer Credit on American Indian Reservations

Abstract

Access to consumer credit on American Indian reservations has been a longstanding concern and yet measurement of consumer credit on reservations is scarce and incomplete. This paper draws on a unique large-scale consumer credit database to provide the first encompassing quantitative picture of consumer credit in Indian country. We find that credit files on reservations are somewhat more likely to lack a credit risk score; in our data the Equifax Risk Score. Furthermore, Equifax Risk Scores and the use of certain forms of credit, especially mortgages, are low on reservations. However, usage of other forms of credit is not always low on reservations. Moreover, the gaps in credit usage on versus off reservations differ significantly across states and can change notably over time. Finally, race, age, education, unemployment, income, and the allocation of jurisdiction over legal matters are important predictors of consumer credit outcomes.

Keywords: American Indian reservations, consumer credit, credit conditions, credit usage

JEL Classification: G21, P43, O16, R11