Before the Fed agreed to raise interest rates going into 2018, interest rates were extremely low throughout 2017. With that being said, consumers were able to take out credit and pay a low interest rate on that debt. It would be safe to say borrowing money has been "cheap". Credit scores are significant, because they are pretty much utilized in any financial scenario if you think about it. If you want any sort of financial assistance, chances are your credit is being pulled to notify the lender whether or not they can lend you cash based on their risk models. You can see the picture above that outlines the different credit score ranges when assessing a consumers financials/balance sheet.
In one of our earlier blog posts we went though some data showing that banks are beginning to struggle with collecting debt lent out to consumers. Other than individual consumers, we wanted to take a more geographical approach today and look at states. As you can see from the figure above, it breaks down credit score by each state. Just use they key on the right no line up with the individual state. The United States continues to be quite diverse when it comes to credit scores. There is a handful of states that are sitting in the 702-721 range which is characterized as Good-Very Good - meaning a lot of these states are eligible for loans with great rates.
Who Is The Winner?
The state of Minnesota comes in 1st place with an average credit score of 709 on the VantageScore Consumer Credit Scoring (MarketWatch). As you can see from the original figure, a score of 709 puts you in the "Good" Category. When looking at the United States as a whole, only 13% of the population has a score eligible for "Good" (MarketWatch). According to MarketWatch, Minnesota has the highest median household incomes in the United States sitting at $67,000/year. Even though credit scores do not only focus on current income levels, it very well could be a catalyst explaining why Minnesota has the top credit scores in the United States. When you make more money you may spend more money. On the flip side, if you make more money, chances are you have a higher ability to pay back debt exactly what Minnesota is showing.
Comments