For most Americans, the debt crisis is steadily fading in the rear-view mirror, but in some parts of the country the issue is still front and center. A look at credit conditions in all 50 states and the District of Columbia revealed sharply different conditions depending on where you look.
Take for instance the foreclosure filings in Florida. Recently Florida’s foreclosure rate was running at nearly 28 times the rate in South Dakota. Bankruptcy filings are 10 times more common in Tennessee than in Alaska and unemployment is almost three times as high in West Virginia as in Nebraska.
As part of an annual study, CardRatings.com looked at a total of five factors and assessed how each state ranked within the categories. The results determined which states are in the best and worst shape with regard to credit conditions.
- Average credit scores from Equifax
- Foreclosure rates from RealtyTrac
- Credit card delinquency rates from TransUnion
- Unemployment rates from the US Bureau of Labor Statistics
- Bankruptcy rates from the Administrative office of the US Courts
The ten best states for credit conditions
1. South Dakota
Average credit score: 719
Foreclosure rate: 1 in 13,544
Credit card delinquency rate: 0.79%
Unemployment rate: 3.8
Bankruptcy rate: 1 in 738.04
This state took over the top spot by ranking among the ten best states in every category, including having the lowest foreclosure rate. In South Dakota, only 1 per 13,544 housing units went into foreclosure, this rate is drastically different than the 1 in 486 rate Florida recently experienced.
2. Vermont
Average credit score: 722
Foreclosure rate: 1 in 4,306
Credit card delinquency rate: 0.89%
Unemployment rate: 3.6
Bankruptcy rate: 1 in 950.78
After tying for second last year, Vermont takes over sole possession of this spot in 2015. Vermont ranked top ten in every category this year, including having the second highest average credit score of any state.
3. Montana
Average credit score: 715
Foreclosure rate: 1 in 9,477
Credit card delinquency rate: 0.80%
Unemployment rate: 3.9
Bankruptcy rate: 1 in 757.09
Sliding up from fourth in 2014 to third this year, Montana is another state which ranks among the ten best in all five categories.
4. North Dakota
Average credit score: 721
Foreclosure rate: 1 in 1,298
Credit card delinquency rate: 0.73%
Unemployment rate: 3.1
Bankruptcy rate: 1 in 1186.97
Since North Dakota rode the energy boom to economic prosperity, it is not surprising to see it fall out of the top spot for credit conditions following the plunge in oil prices over the past year. Still, North Dakota remains among the ten best states in four out of five categories.
5. Wyoming
Average credit score: 713
Foreclosure rate: 1 in 10,522
Credit card delinquency rate: 0.88%
Unemployment rate: 4.1
Bankruptcy rate: 1 in 643.34
Wyoming moved up a couple slots in this years analysis with consistently good performance across the board, ranking no worse than 14th in any of the five categories.
6. Minnesota
Average credit score: 721
Foreclosure rate: 1 in 2,038
Credit card delinquency rate: 0.81%
Unemployment rate: 3.9
Bankruptcy rate: 1 in 483.79
With the third best average credit score of any state, and also ranking among the ten best states in terms of credit card delinquency and unemployment rates, Minnesota was able to improve by three places in this year’s study.
7. Iowa
Average credit score: 712
Foreclosure rate: 1 in 2,228
Credit card delinquency rate: 0.85%
Unemployment rate: 3.7
Bankruptcy rate: 1 in 659.41
Having the fifth-lowest unemployment rate of any state leads the way in Iowa’s generally strong performance across all five categories.
8. Nebraska
Average credit score: 713
Foreclosure rate: 1 in 2,704
Credit card delinquency rate: 0.86%
Unemployment rate: 2.6
Bankruptcy rate: 1 in 433.63
With an unemployment rate of just 2.6 percent, Nebraska has the lowest rate of joblessness in the nation, and is better than the median state in every other category as well.
9. Hawaii
Average credit score: 723
Foreclosure rate: 1 in 1,592
Credit card delinquency rate: 0.95%
Unemployment rate: 4
Bankruptcy rate: 1 in 866.11
Besides having the highest average credit score in the nation, Hawaii is better than median in every other category except foreclosure rate, where it falls about in the middle of the pack.
10. New Hampshire
Average credit score: 717
Foreclosure rate: 1 in 1,881
Credit card delinquency rate: 0.99%
Unemployment rate: 3.8
Bankruptcy rate: 1 in 587.87
Rounding out the top ten is New Hampshire, which excelled by having a high average credit score and low unemployment rate but fared only mediocre in categories like credit card delinquency and foreclosure.
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The ten worst states for credit conditions
1. (tie) Georgia
Average credit score: 662
Foreclosure rate: 1 in 1,148
Credit card delinquency rate: 1.59%
Unemployment rate: 6.1
Bankruptcy rate: 1 in 197.47
After finishing second-to-last in 2014, Georgia slips into a tie for the worst state for credit conditions this year. Major problems include a low average credit score, and high rates of credit card delinquencies and bankruptcies.
1. (tie) Nevada
Average credit score: 679
Foreclosure rate: 1 in 677
Credit card delinquency rate: 1.53%
Unemployment rate: 6.9
Bankruptcy rate: 1 in 279.44
The root of Nevada’s credit problems may be its stubbornly high rate of unemployment, which at 6.9 percent is third worst in the nation. In any case, this is the fifth year in a row Nevada has ranked as the worst state for credit conditions. This year it is tied with Georgia, but it is doubtful that this type of misery loves company.
3. Louisiana
Average credit score: 659
Foreclosure rate: 1 in 1,425
Credit card delinquency rate: 1.59%
Unemployment rate: 6.4
Bankruptcy rate: 1 in 324.13
Below average in all five categories, Louisiana’s biggest problems are the second lowest average credit score and the third highest rate of credit card delinquencies in the nation.
4. Alabama
Average credit score: 663
Foreclosure rate: 1 in 1,762
Credit card delinquency rate: 1.54%
Unemployment rate: 6.1
Bankruptcy rate: 1 in 192.63
Despite being a little better than median on foreclosure rate, being near the bottom in average credit score, credit card delinquencies, and bankruptcy rate dragged Alabama down to the fourth-worst ranking.
5. Tennessee
Average credit score: 675
Foreclosure rate: 1 in 1,306
Credit card delinquency rate: 1.36%
Unemployment rate: 5.7
Bankruptcy rate: 1 in 175.75
The biggest credit problem in Tennessee is the bankruptcy rate, which is the highest in the nation.
6. Mississippi
Average credit score: 650
Foreclosure rate: 1 in 5,090
Credit card delinquency rate: 1.85%
Unemployment rate: 6.6
Bankruptcy rate: 1 in 274.56
In addition to having the lowest average credit score, Mississippi has the highest rate of credit card delinquency.
7. Florida
Average credit score: 683
Foreclosure rate: 1 in 486
Credit card delinquency rate: 1.39%
Unemployment rate: 5.5
Bankruptcy rate: 1 in 318.90
Real estate problems continue to plague this state, with the nation’s highest foreclosure rate.
8. South Carolina
Average credit score: 663
Foreclosure rate: 1 in 959
Credit card delinquency rate: 1.39%
Unemployment rate: 6.6
Bankruptcy rate: 1 in680.34
The bankruptcy rate is actually pretty low in South Carolina, but it is among the ten worst in every other category.
9. North Carolina
Average credit score: 679
Foreclosure rate: 1 in 930
Credit card delinquency rate: 1.40%
Unemployment rate: 5.8
Bankruptcy rate: 1 in 613.26
Credit card delinquencies are the biggest downfall for this state which have also affected the average credit scores for North Carolina.
10. Maryland
Average credit score: 695
Foreclosure rate: 1 in 531
Credit card delinquency rate: 1.31%
Unemployment rate: 5.2
Bankruptcy rate: 1 in 315.26
This state suffers from the second highest foreclosure rate. The average credit score and bankruptcy rate in Maryland are also major factors that affect the overall credit well being of the “Old Line State”.
Progress and regress
While most of the nation has been recovering from the debt crisis in recent years, some states have made more progress than others. Since 2011, the first year of this study, Idaho has made the most progress, rising a total of 27 places from 41st to 14th. Back in 2011, Idaho was clearly worse than the median state in four out of five categories. Now it is clearly better than median in every category except bankruptcies, where is right about in the middle.
Moving the most in the wrong direction since 2011 is Pennsylvania, which has fallen by 19 places from 8th to 27th. The biggest reason for this is that foreclosures are about twice as common in the state now as they were four years ago.
Whether you are an individual looking to relocate or a business deciding where to expand next, knowing which states have the best and worst credit conditions is important. As the degrees of difference between good and bad states show, credit conditions have a way of being somewhat infectious, so you are more likely to thrive where other people are thriving.
