Federal Reserve Bank of New York report finds 55 million US households struggling to afford necessities also struggle to access affordable credit

The Federal Reserve Bank of New York has published a Community Development report, Credit Insecurity and ALICE Households in the United States, finding that 55 million U.S. households that struggle to afford basic necessities also struggle to access affordable credit. The analysis covers households below the Federal Poverty Level and Asset Limited, Income Constrained, Employed households with income above the poverty line but below the local cost of basics, which together account for 42% of U.S. households. Nearly twice as many people in low-income counties lack a credit score or credit file as in higher-income counties. Using regional data to compare low-income and higher-income counties, the report finds that low-income counties with better access to affordable credit had higher median incomes and higher rates of employment, homeownership, and bachelor’s degree completion than low-income counties with less access. Low-income counties also had larger shares of borrowers with no revolving credit, overutilized credit, deep subprime credit, and payment stress or delinquency. In New York, New Jersey, and Connecticut, 15% of the population live in low-income counties with limited access to mainstream credit, while 47% live in counties that have strong access to credit and are higher income. One-third of people in credit-insecure low-income counties live in rural areas. The report was produced in partnership with United for ALICE, a project of the United Way of Northern New Jersey.