Financial security extends beyond income and reflects the overall ability of a household to meet its current and future financial obligations and withstand potential financial shocks. Research finds that even a modest amount of savings can help buffer a short period of being unemployed or help face a medical emergency. Financial security can also include access to credit, debt loads, and financial management.

Metric: Share of households with debt in collections

This metric accounts for the share of households in an area with debt that has progressed from being past due to being in collections.

Validity: Delinquent debt as measured by debt in collections is a valid and strong measure of financial distress.

Availability: Drawn directly from credit reports, the credit bureau data are national and uniform across the country. The data are restricted and are not accessible directly from credit bureaus but are made available publicly on the Urban Institute’s Debt in America website.

Frequency: New data for this metric are available annually.

Geography: Data on households with debt in collections are available by zip code or county.

Consistency: The share of households with debt in collections can be measured consistently for all geographies. The measure is likely to remain consistent over time unless the credit bureaus change the way overdue debt is captured in credit reporting.

Subgroups: The credit bureau data do not include information about race. But the debt value can be disaggregated by subarea when used in combination with the American Community Survey to identify the racial or ethnic composition of neighborhoods (zip codes) with more or less debt in collections. We distinguish zip codes that are majority non-Hispanic white or majority nonwhite. We define a majority as at least 60 percent of residents.

Limitations: Along with the limitations related to subgroups, these data do not capture “credit invisible” households, meaning those without a credit record. As a measure of financial well-being, even if few households have debt in collections, many may still have too little wealth or savings to be primed for upward mobility. This metric is somewhat sensitive to residential mobility. If many residents without overdue debt move in or out of a county or zip code, or if many residents with overdue debt move in or out, this metric could shift.