Examination Finds Growth in Credit Availability and Declines in Financial Stress Nationally, Though Experiences Vary Across Communities

NEW YORK – The Federal Reserve Bank of New York today issued Community Credit: A New Perspective on America's Communities, a chart book and online tool that examine the credit well-being of U.S. communities through their credit behavior. This resource, updated from last year, presents seven key measures of credit well-being. Together, these measures provide a detailed and holistic picture of credit inclusion and stress, highlighting both progress and disparities. The analysis is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data.

By presenting county- and state-level data from 2006 through 2015, this analysis illustrates important aspects of financial health and how they vary by region. The resource released today shows an improvement in several indicators of U.S. credit health since the financial crisis. Importantly, there remains considerable variation in credit well-being across regions, states and counties in the United States as many communities continue to lag in accessing credit opportunities.

“After a far-reaching financial crisis, Americans are beginning to see their credit access improve and financial health return. Despite national improvement, many hard hit communities continue to struggle,” said Kausar Hamdani, senior advisor and senior vice president in the Communications & Outreach Group at the New York Fed. “The New York Fed supports efforts to promote financial inclusion and economic resiliency in America’s communities. Through analyses like these, we are making measures of financial well-being accessible to those working to improve conditions in communities nationwide.”

Across the Nation

Overall, the financial health of communities is showing a recovery following the financial crisis—especially since 2012, which marked a national low in inclusion.

Key Credit Indicators

Financial Inclusion Indicators

• Inclusion (percent of a community that has a credit file and a credit score—known as “the credit economy”): 89.2% in 2015, up from 89.0% in 2014
• Revolving Credit (percent of the credit economy that has access to credit lines, up to a limit—such as credit cards and home equity lines of credit): 69.7% in 2015, up from 68.3% in 2014
• Utilization or Capacity (percent of the credit economy with 70% or more credit line capacity): 37.9% in 2015, up from 37.1% in 2014
• On-time Payers (percent of credit economy who were never more than 30 days past due each quarter): 77.7% in 2015, up from 77.3% in 2014
• Credit Score:
• Prime Credit Scores (percent of the credit economy with an Equifax Risk Score of 720 and higher): 49.9% in 2015, up from 49.1% in 2014
• Subprime Credit Scores (percent of the credit economy with an Equifax Risk Score of less than 660): 33% in 2015, down from 34.2% in 2014

Financial Stress Indicators

• Good Payment History (percent of the credit economy who were never more than 60 days past due each quarter): 81% in 2015, similar to 2014
• Consistently Delinquent Payments (percent of the credit economy who were more than 60 days past due each quarter): 8% in 2015, similar to 2014

Regional Variation in Community Outcomes

• Across all indicators, states in the northern region of the United States displayed greater credit well-being than states across the southern region of the country. For example, North Dakota, Wisconsin and South Dakota had good payment histories of 89%, 87% and 87%, respectively, and consistent delinquency rates of 4%, 5% and 5%, respectively. By contrast, Mississippi, South Carolina, and Louisiana had good payment histories of 73%, 73% and 75%, respectively, and consistent delinquency rates of 11%, 13% and 11%, respectively
• Minnesota ranked among the top three states in credit health, having the highest: inclusion rate (94.2%), revolving credit rate (77.2%), capacity (47.0%), prime credit score (60.6%) and good payment history (87%)
• Arizona, Alaska and New York have the highest percentages of adults who are not in the credit mainstream with inclusion rates of 15.3%, 15.2% and 15.2% respectively
• New Mexico tied with several other states for having the lowest good payment history (75%). At the county level, McKinley County, New Mexico has among the lowest share of revolving credit users (35.2%), the lowest share with capacity (13.7%), and the lowest share of on-time payers (44.3%)
• The Washington, D.C. suburbs, by contrast, fared very well, with Arlington, Virginia consistently ranking among the top three counties for having the highest share of revolving credit users (87.5%) and highest share with capacity (58.2%), while Falls Church, Virginia had the highest good payment history nationwide (95%)

Across the New York Fed’s Second District

The New York Fed’s Second District consists of New York State, the 12 northern counties of New Jersey, Fairfield County in Connecticut, Puerto Rico and the U.S. Virgin Islands.

New York State

• New York tied for the second lowest inclusion rate (84.8%). However, of all U.S. states, New York’s inclusion rate was also the most improved since 2012 (which was 81.8% in 2012)
• There was a large disparity in inclusion rates across counties, with more than a 30% spread between the rates of counties with the highest (Fulton County, 99.2%) and lowest (Bronx County, 67.3%)

New York City:

• Across every credit measure, the Bronx ranked the lowest of all of the boroughs. This included having the lowest inclusion rate (67.3%), the lowest share of revolving credit users (71.7%), the lowest share with capacity (28.6%) and the highest rate of subprime credit scores (47.5%). On a positive note, it also saw the highest share of individuals moving from being overdue on their debts to having good payment histories (9%)
• Across nearly every credit measure, Manhattan ranked the highest of the boroughs. This included having the highest share of revolving credit users (82.8%), the highest share with capacity (51.2%) and the highest share with prime credit scores (61.2%)
• Staten Island had the highest inclusion rate among the boroughs (87.6%)

Additional Counties within New York State

Albany County (which includes Albany)

• Albany County ranked above the New York State average on inclusion (88.1%), while on most other credit indicators it was closely aligned with the New York state averages

Broome County (which includes Binghamton)

• Although Broome County was lower than the state average for inclusion, revolving credit and capacity—it fared well on credit scores. Broome saw a higher than average share of consumers with prime credit scores (57.4%) and lower than average subprime credit scores (26.6%)

Erie County (which includes Buffalo)
Onondaga County (encompassing cities including Syracuse)

• For credit access, Erie (94.1%) and Onondaga (94.9%) counties ranked far above the state (84.8%) and national (89.2%) averages

Monroe County (which includes Rochester)

• For inclusion, Monroe (91.2%) ranked higher than the state (84.8%) and national (89.2%) averages
• It also was higher performing in having a larger share of on-time payers (80.6%), compared to the state (79.5%) and the nation (77.7%)
• In addition, Monroe had a higher share of consumers with prime credit scores (56.2%) than the state (54%) and national (49.9%) averages

Nassau and Suffolk counties (Long Island)

• Long Island was in line with New York state overall on many measures of credit stress—including consumers who were never more than 60 days overdue on their debt (85% for Nassau, 83% for Suffolk and 83% for New York overall), as well as those who have improved from being 60 days overdue, to being less than 60 days overdue on their debt (5% for Nassau, 6% for Suffolk, compared to 6% for New York overall)
• Also of note, Nassau and Suffolk counties were higher than New York overall for inclusion (96.1% for Nassau, 95.1% for Suffolk and 84.8% for New York overall) and for their share of consumers with prime credit scores (62.2% for Nassau, 56.4% for Suffolk and 54% for New York overall)

Tompkins County (which includes Ithaca)

• Tompkins County had a higher share of consumers with capacity (47.6%) than New York (42.2%) and the United States overall (37.9%). Tompkins also ranked higher for individuals who were never more than 60 days overdue on their debts (89%) compared to the state (83%) and nation (81%). However, Tompkins had the second lowest inclusion rate across New York state (70.6%)

New Jersey:

• Monmouth, Bergen, Somerset, Morris and Hunterdon counties all consistently ranked among the top ten counties for New Jersey across many key credit indicators: inclusion, capacity, prime credit scores and good payment history
• Across most credit indicators, Essex County (which includes Newark) ranked worse than the New Jersey state average. This included having a lower good payment history rate (76%), a lower inclusion rate (82.6%), a lower share of consumers with revolving credit (71.5%), the lowest share of consumers with capacity (34.3%) and a higher share of subprime credit scores (40.0%)
• Hudson County (which includes Jersey City) ranked low across several credit indicators, including the second lowest New Jersey inclusion rate (80.3%) and the third lowest New Jersey share of prime credit scores (44.3%)

Contact
Betsy Bourassa  
(212) 720-6885
Betsy.Bourassa@ny.frb.org