Credit Conditions by Neighborhood Income: The Picture in Massachusetts

Lack of data availability has limited research on disparities in credit conditions in different income areas. This report uses a unique dataset from a credit reporting agency to describe credit conditions in Massachusetts in low- and moderate-income (LMI) and middle- and high-income (MUI) census tracts using a unique and nationally representative database of all individuals who have a credit history. The analysis highlights the differences in the percentage of individuals with credit accounts, median balances, monthly payments, delinquency rates, and credit scores in 2006 and 2012. The report shows that the percentage of individuals with active accounts decreased from 2006 to 2012. In particular, the number of consumers with credit cards was significantly lower in 2012 than in 2006 in LMI neighborhoods. Across all types of credit analyzed, delinquency rates were twice as high in LMI tracts than in MUI neighborhoods. Overall, mortgage delinquency rates increased fourfold from 2006 to 2012. Among consumers with credit records, student loans were more prevalent in LMI areas than MUI areas and had the highest delinquency rate of all loans in both income categories. The report shows that 30 percent of individuals with credit records living in LMI areas had subprime credit scores in 2012.