Know Thyself: Access to Own Credit Report and The Retail Mortgage Market

67 Pages Posted: 9 Feb 2021 Last revised: 13 Jun 2022

See all articles by Amit Kumar

Amit Kumar

The Hong Kong University of Science and Technology

Date Written: January 1, 2021

Abstract

Borrowers may misestimate their probability of mortgage approval in the absence of precise signals of creditworthiness. Credit reports, which contain such signals, became easily accessible for all U.S. consumers since 2005, while it was already the case in seven states. A difference-in-differences strategy exploiting this change shows that pool quality of mortgage applicants improved as a result—approvals increased, whereas subsequent delinquencies decreased. These findings are consistent with a mechanism where under-estimators enter the applicant pool and over-estimators drop out, because easier access to credit reports reduces misestimation of one’s own probability of mortgage approval. Additional findings rule out supply-driven explanations.

Keywords: Credit Reports, Information Provision to Consumers, Household Finance, Mortgages, Regulation of Credit Information

JEL Classification: D12, D83, G21, G28, L51

Suggested Citation

Kumar, Amit, Know Thyself: Access to Own Credit Report and The Retail Mortgage Market (January 1, 2021). Available at SSRN: https://ssrn.com/abstract=3732853 or http://dx.doi.org/10.2139/ssrn.3732853

Amit Kumar (Contact Author)

The Hong Kong University of Science and Technology ( email )

Room No 5067. LSK Business Building. Hong Kong Uni
Hong Kong SAR, 000000
Hong Kong

HOME PAGE: http://www.amitkmr.com

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