You may be wondering what your credit score has to do with the condition you live in. After all, it is something that individuals are responsible for and depends on paying all of your dues on time.
Although you are the only one whose actions directly affect your credit score, there are undeniable differences between states regarding the height of the credit score. So this indicates other economic conditions that may change if you move between states. For example, higher credit scores are generally associated with a higher level of income. After all, with more money in their pockets, people can make their payments than those who live paycheck to paycheck.
Before we start classifying states, let’s first give the touch points. The current national median average income is $ 61,937, according to census data. Data from the National Mortgage Database indicates that the national default rate is 0.80%.
Now let’s see the actual ranking of the top five and worst states.
The five states with the best credit scores
Credit score: 724
Minnesota has the highest average credit score. This follows because census data shows Minnesota’s median income to be $ 70,315. Its average delinquency rate is therefore 0.50%. Together they achieve high credit scores.
Credit score: 719
Vermont and New Hampshire, next on our list, have the same median credit score of 719. Oddly enough, Vermont had an average income below the national median, at $ 60,782. However, Vermont had one of the highest average credit scores.
3. New Hampshire
Credit score: 719
With the same credit rating as Vermont, New Hampshire takes third place. It has the same mortgage delinquency rate as the national average. Yet its auto loan default rate was lower than the national average.
Credit score: 718
Massachusetts had almost all major delinquency rates below the national average, including student debt, auto loans, and credit card debt. Additionally, the median household income for 2018 in that state was about $ 20,000 above the national median.
Credit score: 716
Washington is another state with a high median income – $ 74,073. It also has a low delinquency rate, at 0.40%. Unfortunately, data from the Urban Institute Credit shows that residents have also racked up medical debt in Washington, averaging $ 1,846, which could dramatically affect their credit rating.
5 states with the worst credit scores
The following five states performed poorly against the national average. These five states had a median income of $ 50,850 and average mortgage default rates 1.09% to 0.29% higher than the national average.
Credit score: 662
As of July 2020, Mississippi had the lowest credit score in America. It has the second lowest median income, at $ 44,717. Unfortunately, it also has the highest mortgage default rate – 1.50%.
Credit score: 667
Louisiana is, unfortunately, the second worst. It has the fourth lowest median income out of the ten states with the lowest scores. It also had a mortgage default rate of 1.3%, which is considerably higher than the national average.
Credit score: 670
Alabama’s median income is well below the average – $ 49,861. According to data from the National Mortgage Database, its mortgage default rate is also 0.50% higher than the national average.
Credit score: 671
Arkansas is also a state with an incredibly low median income – just $ 47,062. It also has high default rates for loans, including mortgages, auto loans, and credit card debt, making it the fourth worst state.
Credit score: 671
Oklahoma shares the same credit score as Arkansas. It also has significantly higher debt collections (37%) than the national average (29%).
Improve Your Credit Score
As we mentioned earlier, your credit score is completely up to you. If you are looking to improve it, you don’t need to switch to another state. Here are some practices you can implement instead:
Make timely payments
Since your payment history represents 35% of your FICO score, you should try to get into the habit of paying all of your bills on time. If you’re 30 days late, the provider will likely report it to a credit bureau, which in turn will hurt your credit score.
Examine your credit reports
You can find at least an error in 34% of credit reports. Therefore, check your credit reports as often as possible and dispute any irregularity, especially those that can impact your credit score. You can request a free credit report once a year from all three credit bureaus to keep track of things.
Hire an expert
If you can’t seem to improve your credit score on your own (or if you don’t have the time), you can always hire one of the credit repair companies to do it for you. These companies can handle credit disputes, dispute your late payments, and overall help you repair your credit score.