Beyond the Score: Innovative Approaches to Consumer Debt, Creditworthiness, and Financial Resilience

Session Submission Type: Panel

Abstract

In a time of rising prices, growing consumer debt, and limited social safety nets, households across the U.S.—especially those with low incomes—are increasingly relying on credit to meet basic needs. This panel brings together emerging research that reconsiders how we understand and respond to household debt, creditworthiness, and financial insecurity. By combining administrative, survey, and interview data, the papers examine not only the drivers of consumer financial distress but also the institutional, community-based, and policy-level solutions that may build lasting resilience.

The first paper, “Going Into the Red: Consumers' Use of Debt to Afford Groceries and the Relationship Between Local Food Prices and Delinquencies” opens with a national portrait of debt-financed food insecurity, using linked administrative and survey data to examine how families are leveraging credit cards, Buy Now Pay Later services, and payday loans to afford groceries. It identifies strong correlations between local grocery price inflation and rising delinquency, particularly among low-income households.

Next, “Income Volatility, Unemployment, and Financial Wellbeing: Understanding the Role of Credit Counseling” explores the relationship between income volatility and credit counseling participation using a novel linked dataset from Ohio. The study examines how debt management plans affect long-term financial wellbeing, especially for consumers facing unemployment or unstable earnings, offering policy-relevant insights into the design and timing of financial interventions.

The third paper, “Character Credit among Low-Income Homeowners: Evidence from Detroit” shifts focus to qualitative interviews with Detroit homeowners who succeeded in repaying mortgages despite low credit scores. The findings challenge dominant narratives of creditworthiness by highlighting "character credit": a mix of personal identity, social networks, and resource knowledge that traditional credit metrics fail to capture.

The final paper, “Guaranteed Income as a Tool for Financial Liberation and Debt Reduction” introduces new evidence from a guaranteed income pilot in Georgia, co-designed with community members. The study evaluates how regular, unconditional cash transfers affected participants’ debt, savings, and use of high-risk financial services over 24 months. Results show a significant reduction in harmful debt instruments and a measurable increase in emergency and educational savings, particularly among Black women.

Together, these papers demonstrate how collaborative, interdisciplinary research partnerships can inform more equitable and effective responses to consumer debt. They highlight the limitations of current financial scoring and assistance models and elevate alternative approaches—from community-based lending to unconditional cash—that center the lived experiences and long-term wellbeing of financially vulnerable households. In line with APPAM’s 2025 theme, the panel emphasizes how robust research collaborations with government agencies, nonprofit service providers, and communities can produce transformative, data-informed policy solutions that are resilient to ongoing economic and social challenges.

Policy Area

• Poverty and Income Policy

Secondary Policy Area

• Social Equity and Race

Chair

• Leah Hamilton, Appalachian State University

Discussants

• Alec P. Rhodes, Purdue University

• Mariana F Amorim, Washington State University

Organizer

• Leah Hamilton, Appalachian State University

Individual Presentations

• Going Into the Red: How Rising Food Prices Drive Credit Use and Delinquencies - Presenting Author: Kassandra Martinchek, George Washington University

• Income Volatility, Unemployment, and Financial Wellbeing: Understanding the Role of Credit Counseling - Presenting Author: Rebecca F Xie, The Ohio State University

• Character Credit among Low-Income Homeowners: Evidence from Detroit - Presenting Author: Michael Kloc, University of Michigan Ann Arbor; Non-Presenting Co-Author: Trina R Shanks, University of Michigan Ann Arbor; Non-Presenting Co-Author: Patrick Meehan, University of Michigan

• Guaranteed Income as a Tool for Financial Liberation and Debt Reduction - Presenting Author: Haotian Zheng, Washington University in St. Louis