A new study reveals the extent of the financial struggles experienced by residents of one U.S. city. Can you guess where they live?
The financial health and stability of Detroit residents have taken a significant hit in recent years.
In fact, 66 percent of Detroiters have debt in collections, which means the debt is more than 180 days past due, according to a new report from the Urban Institute. Detroiters’ median collection debt is $1,847.
For comparison, across the U.S., 35 percent of Americans have debt in collections, with a median amount of $1,541.
Once the fourth largest city in the U.S., with a robust middle class working in blue-collar manufacturing jobs, Detroit today is a mere shell of its former self.
Broken by the loss of many manufacturing jobs, population decline, rising unemployment, loss of income base and a drop in property values, the former auto capital of the world filed the largest municipal bankruptcy case in U.S. history in 2013.
Delinquent debt can have a significant impact on a person’s financial health.
“That affects future access to credit and future wealth-building potential,” the report’s lead author, Diana Elliott, tells CNN Money.
The report notes that while just 19 percent of Detroiters have healthy credit, a whopping 69 percent of Detroiters have either a subprime credit score, or no credit score.
Credit accessibility is also a challenge for many residents of Motor City. The Urban Institute says:
Detroit residents are less likely to have credit cards, other revolving credit, or auto or mortgage debt. Residents’ credit card limits are lower, and their credit card usage ratio is higher. The low amount of available credit and the high use of it among Detroit residents may reflect financial stress and a lack of access to credit.
Detroit has been trying to rebuild, but it has its work cut out. Elliot says:
“The future of Detroit and its success hinges on the financial success of its residents. In order for the city to prosper, all the residents need to experience the momentum.”
If you need help improving your credit, click here.
Are you surprised to see how many residents of Detroit have debt in collections? Sound off below or on our Facebook page.