Having debt in collections isn’t just bad for Americans’ budgets or bank accounts. It can also lower households’ credit scores, which can have a deep, long-lasting effect on their finances and make it harder and more expensive for them to access credit, like getting a mortgage or borrowing for a small business. Credit report information can even be used to determine eligibility for jobs, access to rental housing, and insurance premiums.

Without access to credit, it’s hard to take the first steps toward building wealth. Wealth is not just for the wealthy. When a family can’t rely on savings for home or car repairs, to cover their bills during an illness or job loss, or to help children pay for their education or job training, it can affect them—and their communities—for generations.

Having debt in collections can result from unpaid bills, including medical bills, utility bills, parking tickets, or membership fees. When debt is more than 180 days past due, it enters collections and can be reported to credit bureaus. According to our new analysis, 71 million American adults had debt in collections reported on their credit records in 2017, putting their financial futures at risk.

How did we arrive at this estimate?

According to 2018 data from the US Census Bureau, 252 million adults (ages 18 and older) live in the US. The Consumer Financial Protection Bureau finds about 28 million, or 11 percent, are “credit invisible,” meaning they lack a score from a major credit bureau, so they don’t use financial tools like credit cards or have a mortgage.

But most American adults—224 million, or 89 percent—have a credit file. Using our random sample of credit file holders, we estimate that 31.6 percent of them, or 71 million US adults, have debt in collections reported in their credit files.

Where do these people live?

Communities are only as strong as the people who live in them. The economic health of states, counties, and cities depends on residents’ financial health and stability. When many residents are dealing with financial challenges, the effects can ripple throughout a region.

Adults with debt in collections are concentrated in the South. The states with the highest share of residents with debt in collections are Louisiana (46 percent), Texas (44 percent), South Carolina (43 percent), and West Virginia (42 percent). (To view data on Americans with any debt in collections on our interactive map, click “Medical debt” in the top menu and view the left side bar. For county-level information, click “download data” at the bottom of the page.)

The counties that have the most residents with debt in collections are also predominantly in the South, including Allendale County, South Carolina (68 percent); Frio and Zavala Counties, Texas (66 and 65 percent, respectively); and Tensas Parish, Louisiana (65 percent).

What can be done to improve Americans’ financial health?

The House recently passed legislation to allow more positive information, like utility payments, to be included in Americans’ credit files, which could help more low-income people build credit history.

Local leaders can develop policies to boost residents’ financial health, starting with the promotion of household savings. Families with a savings cushion as little as $250 to $749 are less likely to receive public benefits, be evicted, or miss a housing or utility payment after a job loss, health issue, or large income drop, which can help keep their credit scores intact. Savings programs with incentives such as matching funds can be used to build an emergency savings cushion or save for long-term investments.

Cities could also assess debt collection practices and provide constructive options for families to repay city debts. Reforming policies around city-levied fees and fines, as some cities are doing, could particularly benefit families of color, who are disproportionately harmed by fees and fines.

Americans feel the negative effects of debt in collections in many ways. The 71 million Americans with debt in collections (and their communities) can benefit from targeted approaches to improve their financial health.