Credit Scores: Highs,Lows and Averages

Oct 20, 2015 by

Credit Scores: Highs,Lows and Averages

Every person in the United States has a credit score. As can be expected from such a wide cross- section of people, those scores are going to vary; sometimes quite a bit. Many people are aware of what constitutes a low credit score and what makes a credit score favorable. What folks may not be aware of, however, is how the numbers are put together, or how they can actually take steps to improve their own credit ratings. With all of this in mind, it is important to understand that there are some areas where lower credit scores are more common than in other areas.

As of the spring of last year, the average credit score in the United States was 669. That is a score that is okay, but not good enough to help people qualify for the best lines of credit or the most favorable interest rates. As you might have guessed, though, the credit scores vary quite a bit from one state to another. For example, in Mississippi (the state with the lowest credit score average) the score came in at 638. This is not a great average credit score for a state. Minnesota came in at the top, with an average credit score of 704. That is the kind of credit rating that helps people to qualify for favorable loan terms and rates on most loans or lines of credit.

Why so many low scores?

A major cause of lower credit scores in some states is that consumers are not as aware of what goes into building a strong credit score as they ought to be. Educating consumers about financial topics plays an important role in helping people to have higher credit scores. Having extra cash, however, is another important factor that must be considered. In Minnesota, the median income is an impressive $61,000. That is almost 2/3 higher than the $38,000 median income level in Mississippi. The disparity in income levels, for better or worse, makes a big difference when considering the average credit scores and financial stability levels from one state to the next.

The president of the Mississippi Council on Economic Education Selena Swartsfager said, “You’ll hear people say it doesn’t matter what you make, you just have to manage what you’ve got. I’m afraid that until we’re able to do something about the level of poverty that we have in Mississippi, we can train people all day long on what to do with their money, but if they don’t have any, then that’s an issue.”

Examining the Big Credit Score Picture

The financial difficulties faced by people in Mississippi definitely showed through when comparing the state to nearby states that had their share of financial difficulties; states, like Georgia and Louisiana. These three states currently have the titles to 10 of the 20 lowest credit score averages in major cities. The upper Midwest, however, was the center of all but one of the top 10 credit ratings in large cities. This data includes Minnesota, Wisconsin, the Dakotas and Iowa. Only Montana came in as an outlier, according to a recent report.

As difficult as it may be, every household has to take its own steps to recover from low credit scores. The most important thing that consumers can do to improve their credit ratings over time is to continue to make on-time payments on all of their loans, credit cards and other financial obligations. We will likely always see credit score disparities across the nation, but it is comforting to know that individuals can take steps to make their credit scores more favorable than they are currently.

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