Working Paper
Building Credit Histories
Abstract: This paper investigates how new borrowers expand their credit access. In particular, we examine the role that consumers’ credit choices, not just repayment behavior, play in building their credit histories. Using credit bureau data, we document that incumbent lenders typically increase credit limits for borrowers who open additional credit cards. This effect is especially pronounced for new borrowers. Our interpretation of this evidence is that lenders perceive credit offered by other lenders as revealing favorable information about the borrower. We build a novel model consistent with this hypothesis and show that the model’s predictions are consistent with the data.
JEL Classification: D14; D82; D83; D86; G21;
https://doi.org/10.21799/frbp.wp.2026.17
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Bibliographic Information
Provider: Federal Reserve Bank of Philadelphia
Part of Series: Working Papers
Publication Date: 2026-03-26
Number: 26-17