A few months ago, I wrote about a study by the Federal Reserve Bank of New York on household debt and credit that found New York City homeowners struggle more than the national average. In late October, the New York Fed published a similar tool showing the country’s “community credit,” which is its relatively new term for the well-being of a community (at the county level) based on the aggregate of its households’ credit characteristics. The New York Fed developed the concept in the wake of super storm Sandy because it noted that some parts of the region recovered more quickly economically than others. One reason was that strong household credit enabled households to survive the storm’s economic aftermath. Community credit complements some of the findings in the earlier post about homeowners, notably that Bronx County is not nearly as financially healthy as other parts of the city, state, and country.
Measuring community credit begins by assessing the size of the county’s credit economy—the percentage of adults with a credit file and credit score. From there, the New York Fed estimates “credit availability,” the percentage of households in the credit economy with revolving credit lines (credit cards or home equity lines), and “utilization,” the percent of households in the credit economy using 30 percent or less of their revolving credit. Community credit measures “credit quality” with the percentage of on-time payers and prime credit scores. Finally, the New York Fed uses payment histories to show a community’s “credit stress” as indicated by the following categories:
- Weak: the percentage of the credit economy with four quarters of payments 60 or more days past due
- Struggling: the percentage with payments 60 or more days past due for 1 to 3 quarters of the previous year
- Declining: Moved from less than 60 days past due to 60 or more days
- Improved: Moved to less than 60 days past due
- Good: Current or less than 60 days past due
Here is a table showing how New York City’s boroughs compare to the state and the country.
|
Community Credit Measure |
U.S.A. |
New York State |
Kings County |
Queens County |
New York County |
Bronx County |
Richmond County |
|
|---|---|---|---|---|---|---|---|---|
|
Credit Economy |
Included |
89.2% |
84.8% |
72.5% |
79.4% |
81.1% |
67.3% |
87.6% |
|
Not Included |
10.8% |
15.2% |
27.5% |
20.6% |
18.9% |
32.7% |
12.4% |
|
|
Available Credit |
Revolving Credit |
69.7% |
76.6% |
78.8% |
80.7% |
82.8% |
71.7% |
80.0% |
|
Utilization |
37.9% |
42.2% |
42.2% |
45.6% |
51.2% |
28.6% |
43.1% |
|
|
Credit Quality |
On-Time Payers |
77.7% |
79.5% |
76.4% |
79.1% |
83.5% |
68.1% |
78.1% |
|
Prime (FICO 720+) |
49.9% |
54.0% |
47.5% |
52.4% |
61.2% |
31.5% |
54.6% |
|
|
Near Prime (600-720) |
17.1% |
17.8% |
20.3% |
20.1% |
17.3% |
21.0% |
17.4% |
|
|
Subprime (<660) |
33.0% |
28.2% |
32.2% |
27.5% |
21.5% |
47.5% |
28.0% |
|
|
Credit Stress |
Weak |
8.0% |
7.0% |
8.0% |
7.0% |
5.0% |
10.0% |
7.0% |
|
Struggling |
4.0% |
3.0% |
4.0% |
3.0% |
3.0% |
6.0% |
4.0% |
|
|
Declining |
1.0% |
1.0% |
1.0% |
1.0% |
1.0% |
2.0% |
1.0% |
|
|
Improved |
6.0% |
6.0% |
7.0% |
6.0% |
4.0% |
9.0% |
6.0% |
|
|
Good Credit |
81.0% |
83.0% |
80.0% |
83.0% |
87.0% |
73.0% |
82.0% |
|
The New York Fed recognizes that an unusually high proportion of New York State’s population does not participate in the credit economy, 15.2 percent. It found nearly identical portions in Arizona and Alaska. In all likelihood, the state’s immigrant population plays a role in this oddity. In fact, among the boroughs, only Staten Island resembles the national average for inclusion.
Moreover, the New York Fed also identified what should be clear from the table: the Bronx ranks poorly in nearly every measure, except improvement in credit stress. Nearly half of its households have subprime credit. Meanwhile, Manhattan does better than all the other boroughs, but lags the state and country in some categories.
The press release on community credit can be found here.
As with its study on household debt, the New York Fed’s community credit study shows that despite its wealth, many New Yorkers have serious credit problems. If your debts are starting to become too much for you, then you should discuss your situation with an experienced New York bankruptcy lawyer.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
