Study ranks states for creditworthiness

North Dakota is financially the healthiest state in the union. Image: afiler/Flickr/CC BY-SA

A person’s creditworthiness depends on a lot of factors, most of which can be controlled to one degree or another. One that can’t, without establishing residency elsewhere, is the state you reside in. A new study rates and ranks the creditworthiness of each of the 50 states.

Where you live affects your credit

“I think the implications for everyone in the states listed is significant, regardless of whether you personally have good or bad credit,” said Curtis Arnold, whose company CardRatings.com conducted the study. “Lenders may have stronger underwriting standards in states in the ‘worst of’ list or vice versa. Like it or not, this can affect the availability of credit for all residents.”

Factors used in the ranking

The study used five main factors to determine each state’s ranking. Those factors are bankruptcy rates, credit card delinquency rates, foreclosure rates, unemployment rates and average credit score. In cases where states had the same point value, the tie was resolved by determining which state rated the highest in more categories, or the lowest in the fewest categories.

The top states

The top 10 states in terms of creditworthiness are North Dakota, Vermont, South Dakota, Nebraska, Montana, Wyoming, Iowa, Pennsylvania, Alaska and Minnesota.

The top states had some things in common. “Low unemployment rates seem to be a common thread,” says Arnold. “No surprise here, as foreclosure and delinquency rates tend to historically mirror unemployment rates.” He went on to call No. 1 North Dakota a “best kept secret,” saying its tip-top financial health has mostly flown under the radar.

The bottom states

The lowest ranked 10 states were Idaho, Mississippi, Michigan, Tennessee, Alabama, Arizona, Florida, California, Georgia and Nevada. Unemployment rates again proved to be the most significant factor. Of them, Arnold finds Idaho’s inclusion to be the most surprising. “I think many people would assume that Idaho is fairly conservative when it comes to lifestyle and spending issues,” he said.

Sources

CardRatings
Daily Finance
PR Web

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