Credit inclusion, or a community's level of attachment to the mainstream credit market, is the focus of this Community Development Brief, the first in a new series of discussion papers on community development issues in the Second District.
When individuals become part of the mainstream credit market through their use of credit products, such as auto loans, mortgages, credit cards and student loans, they potentially gain access to new economic opportunities.
Past discussions in the field of financial inclusion have traditionally focused on the "unbanked," or people who lack basic banking services. This report examines communities through the new lens of credit inclusion. The analysis focuses on New York City and explores two questions:
- To what extent are New York City residents participating in the mainstream credit market and building a positive credit history?
- How much do inclusion levels differ in lower vs. higher income neighborhoods?
Some of the brief's key findings:
- About 69 percent of adults in New York City are actively using mainstream credit products, leaving 31 percent of New Yorkers as the "uncredited" population.
- Among New York City's five boroughs, Staten Island has the highest level of credit inclusion while the Bronx has the lowest.
- Levels of credit inclusion vary across income categories. In low-income areas, 43 percent of residents are not using mainstream credit products, compared to just 15 percent in the city's highest income neighborhoods.
