Brooklyn is the new Manhattan. In fact, I've heard of people in Brooklyn moving to Manhattan because rent is cheaper there. What was once just a distant borough across the Brooklyn and Manhattan Bridges, has now become an undeniable hot spot for renters, homebuyers and tourists who visit the area.
It's tough to rent an apartment anywhere in the New York City area, so you would think credit scores would be king in some of Brooklyn's priciest, most sought-after neighborhoods. But, in analyzing Credit Sesame user credit scores by ZIP code, we found that the average credit score in 10 swanky Brooklyn zip codes was far below stellar, at around 640.
According to Experian and the VantageScore system, the national average credit score is 736. Looks like the hipsters in Brooklyn are way below that.
Why is that?
"I can attest that credit scores are very important to mortgage approvals and rental applications in the highly competitive Brooklyn real estate market," says Crystal Green, a licensed real estate sales person for The Level Group in New York City and a native Brooklyn resident. "But, there are many interesting reasons I've seen why average credit scores in these high-priced Brooklyn areas could be lower than expected."
Mix of income levels
One reason is the diversity and evolution of these neighborhoods. "They are a mix of long-standing working class, lower-income residents combined with new money coming in as each neighborhood grows in popularity and prices out newcomers, only to grow a neighborhood a few blocks over," explains Green.
Take Clinton Hill, for example, where Green lived for 17 years. When she decided she wanted a yard, she knew the prices were much cheaper a few blocks over in Bed-Stuy (short for Bedford-Stuyvesant), where she rented a garden apartment in a brownstone for hundreds cheaper than in Clinton Hill.
That's why Bed-Stuy is a popular neighborhood, although still rough around the edges, with an average lower credit score of 580, according to Credit Sesame data.
Saddled with student loans and credit card debt
Another reason for the lower credit scores Green sees is many young, high-income professionals in New York City are saddled with student loan debt and other collections.
"I can see on rental applicant's credit report that they have had problems paying their many education loans on time plus small defaults and other collections which hurts their credit scores," she says.
Green says she often sees surprisingly poor credit scores even when applicants have good income and lots of cash because their credit reports show they are carrying a lot of credit card debt, too.
Cash is still king
These Brooklyn neighborhoods represent a very competitive buyers' and renters' market, especially in the busy months from April through October and Green says that's when credit scores come into play the most.
"When looking at rental applications, I simply disqualify anyone with a credit score lower than 650," she says. "In some Park Slope buildings, where I manage all the rentals, I disqualify anyone with a credit score below 700," she says, explaining that all renters have to sign a consent form for a credit check on the rental application.
The way renters get around their credit problems in these highly-desired Brooklyn neighborhoods is by offering to pay several months more in security deposit in addition to first month's rent and last month's rent, advises Green.
"If someone qualifies with a good income but has poor credit, they better show up with a suitcase full of cash and a guarantor who makes twice as much as the qualifying amount to sign for the lease," she says.
And, if you're looking for more Brooklyn inventory for a cheaper price and you have credit score problems, move on over a few blocks to the next up-an-coming Brooklyn neighborhood.
Here's a breakdown of expensive Brooklyn neighborhoods and their average Credit Sesame credit scores by ZIP code, starting with the highest.
Park Slope - 11215
Average credit score: 704
Park Slope is a family-centric neighborhood. It's normal to see an army of strollers parked outside cafes and shops.
Populated by many historic brownstones, Park Slope is another premium neighborhood that sits on the west side of Brooklyn.
Gowanus - 11215
Average credit score: 704
Pronounced Go-wah-nus, this hip neighborhood is right off the F Train.
A little off the beaten path (it's a 10-minute walk to a subway stop), this Brooklyn area has officially made it on the map with the first Whole Foods Market in Brooklyn.
DUMBO - 11201
Average credit score: 677
DUMBO is the hub for many tech companies and startups and is quickly becoming a tourist hot spot.
An acronym for Down Under the Manhattan Bridge Overpass, this neighborhood spans an area between the Manhattan and Brooklyn Bridges continuing east. It is currently the most expensive and desirable neighborhood in Brooklyn because of its proximity to Manhattan and also boasts New York City's highest concentration of technology firms.
Boerum Hill - 11217
Average credit score: 671
One of Brooklyn's neighborhood favorites, Oriental Pastry and Grocery is in the heart of Boerum Hill.
Previously zoned commercial, this 36 bustling blocks full of shops is now zoned for residential living and drawing interest.
Williamsburg - 11211
Average credit score: 653
Home to beards and buns, hipsters and yuppies, Williamsburg is a sprawling neighborhood of new lofts and overpriced apartments.
An up-and-coming neighborhood with new luxury condos going up mixed with old apartment buildings bordered by Greenpoint, Bed-Stuy and Bushwick.
Fort Greene - 11205
Average credit score: 632
Fort Greene is a prime example of a gentrified Brooklyn neighborhood. Myrtle Ave. finally has a Starbucks!
Designated one of New York City's Historic Places, this area is known for its architecture and atmosphere. Located in Northwest Brooklyn, above Prospect Park and bordered by pricey Clinton Hill (with some surrounding housing projects), there is easy access to transportation and subway lines.
Carroll Gardens & Red Hook - 11231
Average credit score: 609
Brooklynites flock to Red Hook to shop at Fairway, which is located behind the building in the photo.
Extending South from Boerum Hill, Carroll Gardens is now also busy with shops, cafes and antiques.
Although it shares the same ZIP as its neighbors in Carroll Gardens, Red Hook is closer to the water and desirable because of just that, but not for convenient transportation. It may take 15 minutes to get a subway line. Because of this, it has a small artistic community but is not growing as fast as other more convenient neighborhoods.
Bushwick - 11237
Average credit score: 591
Rental prices in Bushwick are quickly rising, as more trendy shops and restaurants open in the area.
Flanked by East Williamsburg and Bed-Stuy, Bushwick is where those who can't afford Williamsburg are migrating for cheaper prices, although it's still evolving.
Bed-Stuy - 11206
Average credit score: 580
Don't let Bed-Stuy's low credit score ranking fool you. Rent prices in the area are also quickly rising, average rent for a 1-bedroom apartment is $2,053.
Also, bordering Williamsburg, Bed-Stuy is catching the Fort Greene and Clinton Hill overflow, where there is more inventory available at slightly lower prices and less competition.
How do you stack up against these Brooklynites? Remember, Credit Sesame provides free credit monitoring and your score. You can sign up on our homepage.