Charlie Frohne never wanted a Visa or MasterCard, afraid of incurring debts he couldn't repay. As the 30-year-old searched for a Manhattan apartment, he found landlords treated his lack of a credit history as a liability.

His experience highlights a growing reluctance among young adults to use plastic for everyday purchases. A Sallie Mae and Ipsos Public Affairs survey found the use among undergraduates was down from 49 percent in 2010. And young adults who do have credit cards are carrying smaller balances: A median of $1,600 in 2010 compared with $2,500 in 2001 for under-35 households, according to Federal Reserve data.

NO CREDIT HISTORIES

The trend, rooted in stricter lending rules and weaker job outlooks for young Americans since the 2008-09 recession, has implications for the strength of the economy. As people in Frohne's age group eschew plastic, fewer are building the credit histories that would help them to gain financing for purchases of homes and cars that are critical to economic growth.

"You could say that they're not going to get mortgages, and that could have dire economic consequences," said Ann Schnare, a consultant in the mortgage industry and a former vice president of housing economics and financial research at Freddie Mac in McLean, Va. "But that assumes a static model. I think that the industry will respond."

Credit bureaus and the lending industry are stepping up their search for new ways to bolster credit files, and young people who don't pay credit card bills often do pay mobile phone bills. As reporting agencies gather data from telephone, rent and other payments, some scoring models incorporate it to help assess candidates' creditworthiness.

"If the only way to get credit is to borrow, young people are going to be slower to borrow. It is circular," said Rachel Schneider, senior vice president of insights and analytics at the Center for Financial Services Innovation, which grew out of a research project done on behalf of the Ford Foundation in 2002 and strives to help so-called "underbanked" consumers access stable financing.

Leveraging extra data is a way of "bringing new people in" for banks as the economy rebounds, she said. "It helps them expand the market."

HUGE ECONOMIC DRIVER

Credit card borrowing, one of the drivers of the consumer spending that makes up 70 percent of the U.S. economy, has been shrinking across all age groups since the recession. New York Federal Reserve data showed that total credit card debt declined by $25 billion, or 3.6 percent, for the fourth quarter of 2012 from the same period in 2011. Since fourth quarter 2007, it has dropped about 19 percent, based on Fed data.

LONG DECLINE IN USAGE

The decrease has been marked among consumers younger than 35, a Pew Research analysis released last month found.

Credit card use for young people began declining before the recession, and between 2007 and 2010 dropped 20 percent, based on the Pew findings. The share of young American households carrying a credit card balance fell to 39 percent in 2010 from 48 percent in 2007.

That could be partly the result of a 2009 law, the Credit Card Accountability Responsibility and Disclosure Act, which made it more difficult for credit card companies to market and distribute cards on college campuses, said Brannan Johnston, vice president and managing director of credit bureau Experian Plc.'s RentBureau division.

Scarce job opportunities for young adults also play a role. Regardless of the cause, a generation of credit-averse consumers could weigh on the economic recovery.

"Given the trends in credit usage by younger Americans, I think there will be a growing number of Americans who are credit-invisible," said Michael Turner, chief executive officer of the Policy and Economic Research Council, a Durham, N.C.-based non-profit that researches ways to extend credit to those who lack it.

Without histories to inform them, lenders may shy away from young consumers and landlords may deny leases or charge higher security fees, Schnare said.

Now, the recovering economy has rekindled interest in capturing previously unreported data to allow credit bureaus and lenders to create more complete consumer credit profiles, even for those who don't borrow.

"There will definitely be more economic activity," Turner said. "Those same people who aren't using credit cards or auto loans or mortgage loans are paying cable or broadband."

OTHER PAYMENT INFORMATION

Data on energy and telecommunications payments can make good gauges of creditworthiness and could allow banks to extend more, safer loans, according to a December 2006 Brookings Institution report by Turner, Schnare and three other researchers.

It's unclear what information can be turned over and collected under the Fair Credit Reporting Act, Turner said. Beyond that, data such as rental payment histories is tough to collect, because it requires the cooperation of large numbers of billers. In an effort to overcome that difficulty, Dublin-based Experian in 2010 acquired RentBureau, which collects rental payment data in the U.S.

A partnership announced last month will let renters pay through Northbrook, Illinois-based WilliamPaid LLC's online system and have positive payment data added to Experian credit files.