Researchers are exploring whether everyday grocery purchases can be used to assess financial reliability, potentially opening credit access to millions currently excluded from the traditional financial system. A new study by Rice University, the University of Notre Dame, and Northwestern University suggests a correlation between shopping habits and on-time bill payments – a link that could reshape how creditworthiness is evaluated.
The Problem of “Credit Invisibles”
Millions of people, particularly in developing economies and among younger generations, lack a credit history, making it difficult to secure loans, rent an apartment, or even get a mobile phone contract. This group, known as the “credit invisible,” is often excluded from financial services despite responsible behavior in other areas of their lives. Current credit scoring relies heavily on traditional data like payment history and account age, leaving many without a way to prove their trustworthiness.
The Peruvian Experiment
Researchers analyzed data from Peru – a country with a robust customer loyalty system and accessible financial records – to determine if grocery purchases could predict repayment reliability. The study combined grocery loyalty transactions, credit card repayment data, and administrative financial records.
The findings were striking: people who consistently purchased healthier foods like milk, yogurt, and fresh produce demonstrated a higher likelihood of paying their bills on time. Conversely, those who favored items such as cigarettes, energy drinks, or canned meats showed a higher rate of missed payments.
This correlation held even when controlling for income, job type, and family size, suggesting that shopping choices may reflect underlying financial discipline or impulsivity.
Consistency Matters
The study also revealed a pattern in the behavior of reliable borrowers:
- Regular Shopping Days: Consistent weekly shopping schedules.
- Stable Spending: Predictable monthly expenditures.
- Brand Loyalty: Preference for familiar products and brands.
This consistency in retail habits mirrored the consistency in their bill-paying behavior. The researchers then simulated how this alternative data could be used to assess creditworthiness for those with no formal credit history.
Future Implications
While still experimental, this research highlights the potential of alternative data to expand financial inclusion. Lenders are already experimenting with rent and utility payments as indicators of creditworthiness, but grocery purchases could offer a more readily available and granular data source.
“This shows how unconventional data points can still provide meaningful insights into an individual’s financial behavior,” says one of the study’s co-authors.
The use of grocery data for credit scoring raises privacy concerns, but the potential to unlock financial access for millions makes it a topic worth further exploration. The study suggests that if lenders adopt this approach, responsible shopping habits could become the new key to financial opportunity.
