Answer: The credit card market is an information asymmetric market similar to the insurance market. It is difficult for credit card issuers to know cardholder information. So they can only charge the same interest rate to all cardholders. But this will only attract more "low-quality (cannot repay on time)" cardholders and drive away "high-quality (able to repay on time)" cardholders.

If the credit reporting system is developed, credit card companies and banks can use the credit history of cardholders to reduce information asymmetry, making it easier to distinguish between "low quality" and "high quality" credit cards. cardholders, thereby mitigating the adverse selection problem.