Payday loans are controversial high cost, short-term lending products, banned in many US states. But debates surrounding their benefits to consumers continue. We analyse the effects of payday loans on consumers using a unique dataset including 99% of loans approved in the UK over a two-year period matched to credit files. Using a Regression Discontinuity research design, our results show payday loans provide short-lived liquidity gains and encourage consumers to take on additional credit. However, in the following months, payday loans cause persistent increases in defaults and cause consumers to exceed their bank overdraft limits.

Since the 2000s, economists across fields have increasingly used consumer credit reporting data for research. We introduce readers to the economics and institutional details of these data. Using examples from the literature, we provide practical guidance on how to use these data to construct economic measures of borrowing, consumption, credit access, financial distress, and geographic mobility. We explain what credit scores measure and why. We highlight how researchers can access credit reporting data via existing datasets or by creating new datasets, including by linking credit reporting data with surveys and external datasets.