This dissertation investigates how households’ financial health and borrowing choices respond to adverse economic shocks and to the design of credit products. I combine large‑scale administrative credit records with quasi‑experimental research designs to shed new light on the mechanisms that drive delinquency, the effectiveness of crisis‑time liquidity in alleviating financial distress, and the salience and importance of different loan features in household borrowing decisions. The first chapter quantifies the long‑run consequences of labor‑market disruptions during the Great Recession. Exploiting county‑level variation in employment shocks due to the Great Recession, I show that a one‑percentage‑point drop in employment raises balances past due on delinquent debts by 3.6 percent, an effect that persists for nearly a decade and is not explained by housing‑wealth shocks. These findings highlight a durable channel through which macroeconomic downturns impair household creditworthiness The second chapter turns to policy responses, estimating the causal impact of emergency credit from the U.S. Federal Disaster Loan Program. We exploit a debt-to-income cliff in loan approval and a difference‑in‑differences strategy, finding that access to subsidized liquidity cuts three‑year bankruptcy incidence by 61 percent and boosts durable‑goods consumption. Timely provision of credit offers substantial, persistent relief to households facing uninsured losses. The third chapter examines how households choose among borrowing contracts and provides evidence for sensitivity to the size of recurring payments. Leveraging kinks and notches in mortgage cost schedules created by mortgage insurance requirements, I document pronounced bunching at payment thresholds that cannot be rationalized by standard models of forward-looking behavior, even in the presence of credit constraints. A dynamic consumption–savings model shows that only strong sensitivity to the initial size of recurring payments — rather than to lifetime costs — can reconcile the observed choices. These results imply scope for lenders to shroud borrowing costs and for policy to protect payment‑focused borrowers. Together, these essays demonstrate that (i) negative shocks translate quickly into lasting financial distress, (ii) well‑targeted liquidity can markedly improve post‑shock outcomes, and (iii) the framing of loan payments strongly shapes borrowing behavior. The results inform the design of counter‑cyclical credit programs and consumer‑finance regulation aimed at enhancing household resilience.