A study of early adult credit use among adolescents affected by foreclosure

Silhouette of a child looking out the window at the sunset.

working paper

WP 22-21 – We investigate the long-term effects of foreclosure-induced transfers on adolescents and later use of credit.

We asked whether individuals who experienced a foreclosure-induced move between the ages of 10 and 17 were more likely to show signs of credit damage later in life. To establish a set of counterfactual results. implements propensity score matching with exact matching for a given trait and regression adjustment for residual covariate imbalances. We then compare the credit behavior of individuals who experienced foreclosure-induced migration during adolescence with similar individuals who experienced neither foreclosure nor migration during adolescence. It found that young adults who experienced foreclosure-induced movements tended to spend more time in one or more trade lines with severe delinquencies and were more likely to seek credit at a higher rate. I was. Experiencing foreclosure and moving during adolescence. This association is most pronounced within the group of children whose parents had her score non-prime her credit one year before her mortgage commencement. Defaults and low credit ratings are also prominent in the group of young people aged 10 to her 14 at the time of the foreclosure.

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