A Look at Women and Their Credit Habits

There has been a fair amount of research done on gender differences in credit usage. For example, a 2015 study by Experian suggests that women, on average, have more credit card accounts open than men. As to why this is the case, the study gives no answer. But this factoid is only the beginning of gender differences in credit.

According to the FINRA Investor Education National Financial Capability Study, women are more likely than men to carry balances, pay only minimum monthly payments, and be assessed late fees. This study seems to suggest that women have poorer credit practices than men, but a study of the HMDA and the Lending Patterns data found women’s experiences to be similar to men’s when measured by origination, denial, and fallout rates.

These studies tend to send some mixed signals, but a recent study by the federal reserve has an additional statement to make on the matter. “Using a unique proprietary data set, I study differences in credit market experiences between single men and women younger than 40 years old,” explains Geng Li, author of the study. “I find that, in the data sample I am able to construct, the single women in this age group have, on average, somewhat lower credit scores than the single men with comparable demographic characteristics.”

This doesn’t necessarily mean women are less creditworthy. One particular behavior of interest to researchers is the self-rationing behavior of women in the credit market. Specifically, women in small business. According to recent study published in the Social Science Journal by Naranchimeg Mijid and Alexandra Bernasek, women tend to apply for credit less frequently, which could explain the lower scores.

“Testing the robustness of the results we find that women seem to be rationing themselves in the credit market rather than being discriminated against by banks,” they explain in their research. “Reasons for this self-rationing behavior are an important topic for further research.”

While the reason for the differences are not certain, the facts of the matter are interesting. It’s only a matter of time before the research community provides some concrete answers to these pressing questions.