It wasn’t too long ago that Detroit was a booming town with a robust middle class. But after the decline of manufacturing crushed the local economy, Detroit filed the biggest public sector bankruptcy in U.S. history in 2013.
And the city’s troubles have left a mark on the financial stability of its residents in a big way, according to a new report from the Urban Institute.
About 66% of residents have debt in collections — meaning more than 180 days past due — at a median amount of $1,847. Across the U.S., 35% of Americans have debt in collections.
“Delinquent debt is quite prevalent in Detroit,” said Diana Elliott, lead author of the report. “That affects future access to credit and future wealth-building potential.”
Credit accessibility is limited for many residents in the city: just 15% of Detroiters have an auto loan, 27% have revolving credit (usually a credit card) and 7% have a mortgage, the report found. All three numbers are significantly below the national averages.
Since its high in 2006, the number of new mortgages has dropped by 94% in the city.
The main reasons behind the lack of credit are residents’ subpar credit scores and debt loads.
The study found that just 19% of the city’s population has healthy credit, which it defined as having one line of credit that hasn’t been delinquent in the past year, and no lines of credit 60 days late in the past two years. CONTINUE @ CNN