The role of credit reports in digital lending: a case study from Mexico.

The article examines the impact of integrating credit bureau scores into the lending process of a digital lender in Mexico, focusing on how this affects loan repayment and borrower characteristics. Using administrative data on nearly 12,000 loans and a regression discontinuity design around the date the lender began using credit bureau information, the study finds that the introduction of credit scores increases repayment rates by approximately 10–13 percent. Additionally, after adopting credit bureau scores, approved borrowers tend to have higher incomes and request larger loans, suggesting a potential reduction in financial inclusion for lower-income, single, and female borrowers. The findings highlight both the benefits of information sharing through credit reference bureaus (CRBs) for improving repayment and the possible trade-offs regarding access to credit among marginalized populations in digital credit markets.