Why Your Credit Report Stopped Showing Your Card Payments
Large credit-card lenders stopped reporting information to limit competition.
Why Your Credit Report Stopped Showing Your Card PaymentsA Share Too Far: How Innovation Unraveled US Credit Card Information Sharing
Benedict Guttman-Kenney, Econ PhD student
In this paper I examine two sources of information asymmetry – credit risk and non-credit risk behaviors – and demonstrate how this can create heterogeneous incentives for firms to share data with their competitors. I show how a market efficient data innovation in the US unraveled. This unraveling occurred because a subset of credit card lenders hold private informational rents and were able to exploit their market power to foreclose on their competitors. This is an economically important topic as it affects the majority of US credit files and consumers’ access to credit. The US consumer financial protection regulator (CFPB) recently announced its intention to investigate this and my research can inform such policymaking.