There Are 6 Kinds of Borrowers: Which One Are You?

Most Americans have only one kind of debt, if they have any at all, according to a new report from the Urban Institute. By analyzing five years of credit-report data of more than 5 million Americans, researchers identified many trends among U.S. debtors, including the most common kinds of borrowers.

About 89% of consumers with credit reports fell into one of the following six categories.

1. No Debt

This is the most common type of consumer. Of the credit report sample researchers studied, 29% of consumers had no debt. Keep in mind the study looks only at consumers with credit reports, so it doesn’t include people debt-free consumers without reports. Also, people without debt had lower credit scores than those with some debt.

“These consumers may not have the credit record necessary to obtain debt, rather than a lack of desire to borrow,” the researchers wrote in a post about the report. “This also suggests a feedback loop: those who receive credit are able to use it to build a credit record. This fact highlights the importance and difficulty of getting that first foot onto the credit ladder.”

This no-debt group doesn’t include people who use credit cards but pay the balances in full every billing cycle. These consumers, called transactors, couldn’t be distinguished from consumers who carry balances (and therefore accrue interest on their debts). Those consumers are called revolvers.

2. Credit Card Spending Only

Credit cards are the only kind of debt for 22% of consumers, though some of them may not consider themselves “in debt.” Because researchers could not differentiate transactors and revolvers (i.e. people who never carry a balance on their credit card vs. those who do), this figure includes anyone who only uses credit cards and no other kind of credit, whether they carry balances or not.

It makes sense that such a large chunk of consumers only have credit cards, as they are one of the easiest forms of credit to get. There are credit card options for people of all credit histories (including those with bad credit or no credit). You should compare credit cards before you apply to make sure the credit requirements match your credit profile.

3. Mortgage Only

For 13% of consumers with a credit report, home loans are their only kind of debt. Given that you generally need a good credit score to get a mortgage and the only way to do that is to use credit, it’s likely these people had some other form of debt at some point.

4. Auto Loan Only

For 12% of borrowers, their only debt was an auto loan.

5. Auto Loan & Mortgage

Shelter and transportation are necessities, so it’s unsurprising that this is the most common loan combination among American borrowers. These people make up 9% of borrowers.

6. Student Loan Only

Borrowers can get federal student loans with no credit history, often making them people’s first kind of debt. The good news is that helps some people establish a credit history, but large student loan balances are causing financial trouble for a lot of Americans. For 4% of borrowers, education debt is the only kind of debt they have, but plenty of people have student loan payments in addition to other obligations.

In all, the researchers calculated 16 possible debt combinations, so these are just the most common kinds of borrowers. There are a lot of borrowers who have multiple debts, but they’re divided into different (smaller) classifications. Whatever kind of debts you have, you can see how they affect your credit by getting your credit scores for free every month on Credit.com.