Whether microcredit has positive impact on education and healthcare spending of the borrowed households is controversial in developing countries literature. This dissertation reports evidence, from Pakistanfor this debate while utilizing PPHS-2010 (Pakistan Panel Household Survey) data Propensity score matching (PSM) has been used toexamine the impact of household credit on education and healthcare spending by the poor. In addition to matching statistically identical non-borrowers with borrowers, themethod controls for household pre-treatment income and assets, this may be associated with unobservable factor affecting both credit participation and outcomes of interest. The estimates of binary treatment effect show insignificant impact of borrowing on education and significant and positive impact on healthcare spending. However, multiple ordered treatment effect estimates reveal that formal credit has significant and positive impacts on healthcare spending, and insignificant impact on education expenditure, while informal credit has insignificant impacts on education expenditure and significant on healthcare spending. Supervisor: Dr. Muhammad Jehangir Khan