Money Health

What’s the Average Credit Score in Your State?

What's the Average Credit Score in Your State
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Your credit score is a three-digit number that lenders use as a measure of how responsible you are likely to be when you borrow money. Lenders and creditors use it to help them decide whether or not to approve you for a loan or credit card. The higher your credit score is, the more likely you are to get approved. A higher credit score can also lead to lower interest rates, and more favorable terms.

Knowing your credit score is a great place to start working on improving your financial health. But what about the average credit score for those in your area or in your state? This can be one more way to help you get a good idea of how likely you may be to qualify for financing with rates and terms that you desire. It can help you understand the effects of recession, unemployment, and economic impacts in the state you live in.

So, if you’re asking yourself “what is an average credit score”, and want to know more about credit scores in your state, keep reading to learn more.

Average credit scores by state in 2020

Experian, one of the three major credit bureaus performed some research to determine average credit scores by state. They considered VantageScores, which are the credit scores developed by Experian, TransUnion, and Equifax. Experian’s findings are as follows:

State Average Credit Score
Alabama 665
Alaska 684
Arizona 684
Arkansas 668
California 695
Colorado 703
Connecticut 700
Delaware 687
Florida 680
Georgia 665
Hawaii 705
Idaho 700
Illinois 694
Indiana 682
Iowa 707
Kansas 692
Kentucky 675
Louisiana 661
Maine 698
Maryland 688
Massachusetts 710
Michigan 692
Minnesota 720
Mississippi 658
Missouri 685
Montana 704
Nebraska 707
Nevada 671
New Hampshire 711
New Jersey 699
New Mexico 673
New York 699
North Carolina 679
North Dakota 709
Ohio 687
Oklahoma 667
Oregon 705
Pennsylvania 699
Rhode Island 698
South Carolina 667
South Dakota 712
Tennessee 675
Texas 666
Utah 700
Vermont 712
Virginia 692
Washington 710
West Virginia 672
Wisconsin 711
Wyoming 694

The highest credit scores can be found in South Dakota, Vermont, New Hampshire, and Wisconsin. Alabama, Georgia, and Mississippi have the lowest scores.

Credit score and unemployment rate

You may have already noticed some correlation between how your state is doing during the recession, and how high the average credit scores are. In states where unemployment is higher, credit scores may be lower. The link between the two isn’t complicated. While being unemployed doesn’t directly impact your credit score, it can increase your risk for missing payments and taking on more debt. Missed payments and increased debt burden will usually lower your credit score.

In Wisconsin, for example where the average credit score is 711, and the unemployment rate is 5.4%. Mississippi’s unemployment rate is a bit higher at 7.1%, and the average credit score in the state is lower at 658.

It’s important to note, however, that a high unemployment rate doesn’t always lead to a lower average credit score. Hawaii is a great example of this, the state’s unemployment rate is sky-high at 15.1% yet the average credit score is 705. Hawai’i is a hospitality-based economy therefore hit very hard by the pandemic, but it may also attract people with other resources as residents.

So, even though the picture may be more complex than it seems at first, it is still a good idea to try and understand what in your local economy may impact your score.

Other ways to measure financial health

In addition, while your credit score is important, it’s not the only way to measure financial health. Let’s look at some other data that can give you an idea of how you’re doing financially.

  • Net worth: Your net worth is your total assets minus your total liabilities. If you track your net worth on a regular basis and find that it’s constantly increasing, you’re probably on the right track. On the contrary, if your net worth continuously goes down, you may have a spending or income problem.
  • Debt-to-income ratio: Your total monthly debt payments divided by your total gross income will give you your debt-to-income ratio. A debt-to-income ratio of 30% or under is ideal.
  • Retirement fund: Your retirement fund (401k, Roth IRA, etc.) is important, especially if you hope to stop working at a certain age. You can use tools like a retirement calculator to figure out if you’re saving enough.

How to build your credit

Now that you have an understanding of what might be affecting scores in your state and your individual score, there are steps you can take to get some control over your personal situation and work to build a good to excellent credit score (670+). Here are some ideas to get you started.

  • Get a credit card: If you’re new to credit or rebuilding your credit, a secured credit card can be a good place to start building credit. You’ll have to pay a deposit to open it up, but it can be an effective way to show you’re a responsible borrower, as long as you make your payments on time, every time.
  • Stay current on your bills: Don’t miss any payments on your mortgage, car loan, and other bills. If you’re struggling financially or believe you won’t be able to make a payment, reach out to your lender to learn about your options. They may allow you to make a partial payment or delay your payment.
  • Become an authorized user: By becoming an authorized user on a friend or family member’s account, you may increase your own credit score. Just make sure the individual with the account is trustworthy and responsible.

Is your debt keeping you from a good credit score? FDR can help.

It can be difficult to achieve a good credit score if you’re struggling with a large amount of debt. If you’re ready to leave your debt behind you and work toward a more secure financial future, talk to a Freedom Debt Relief Certified Debt Consultant. They can educate you further on the program or help you better understand other options. Get started now.

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Anna Baluch is a freelance writer who enjoys writing about all personal finance topics. She’s particularly interested in mortgages, retirement, insurance, and investing.