Journal Article

The Geography of Subprime Credit

Abstract: Improving the financial lives of the people living in neighborhoods with large concentrations of lowcredit-scored households1 requires an understanding of the socioeconomic and financial challenges of those places. In this study, we identify such neighborhoods and analyze their socioeconomic and financial attributes, focusing on Illinois, Indiana, Iowa, Michigan, and Wisconsin (the five states served by the Federal Reserve Bank of Chicago). We find geographic patterns in the locations of subprime-scored households, in particular that these households are more highly concentrated in urban centers, while suburban areas tend to have very few subprime households. The states of Wisconsin and Iowa have lower shares of subprime households than Illinois, Indiana, and Michigan. We also find significant differences in neighborhood characteristics in places where subprime-scored households live, including a much higher non-white share of the population, weaker labor market outcomes, lower educational attainment, and higher housing vacancy rates.

Keywords: Consumer credit; subprime mortgages; credit cards; households;

Access Documents


Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Profitwise

Publication Date: 2019

Issue: 6

Pages: 1-11