We study how income and wealth inequality affect the transmission mechanism of a credit deepening to consumption in a heterogeneous-agents incomplete markets model. After a one-time unexpected shock that increases the borrowing capacity of households, there is a short-run consumption boom and a subsequent persistent bust due to household leverage. At the household level, consumption response is driven by two channels: a direct channel of credit, which we characterize by a novel statistic - the Intertemporal Credit MPC, and the indirect channel led by budget and intertemporal substitution effects. Heterogeneity in responses is caused by the household wealth position, and these results also hold at the aggregate level, with wealth inequality amplifying consumption cycles through the direct channel of credit, while the indirect leads to a quicker recovery. Moreover, based on aggregate consumption, sectoral credit, and inequality cross-country data, we find robust evidence on consumption Boom and Bust cycles, and weak evidence of inequality as a state- dependent amplifier of these cycles.