We show that high-cost debt exacerbates financial constraints by affecting lenders’ perception of credit risk. Using data from a high-cost lender in the UK, we show that high-cost credit reduces applicants’ credit score and future bank credit even though it does not affect future debt repayment. These effects are not present among borrowers who are already tagged as high risk at application, consistent with high-cost credit affecting lenders’ beliefs about borrowers’ creditworthiness. The results highlight a novel channel through which high-cost credit can harm consumers’ financial health: a self-reinforcing stigma of high risk.

中文翻译：

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高成本债务和可感知的信誉：来自英国的证据

我们表明，高成本债务通过影响贷方对信用风险的看法加剧了财务约束。使用来自英国高成本贷方的数据，我们表明高成本信贷会降低申请人的信用评分和未来的银行信用，即使它不会影响未来的债务偿还。这些影响在申请时已被标记为高风险的借款人中不存在，这与影响贷方对借款人信誉的信念的高成本信贷一致。结果突出了高成本信贷损害消费者财务健康的新渠道：自我强化的高风险污名。