New Study Reveals Credit Scores by City
Credit scores give a measurement of an individual’s financial health. Higher credit scores enable a consumer to receive the best interest rates on mortgages, loans, and credit cards, in addition to better financing on larger purchases, such as automobiles.
Last week, the credit agency Experian released its State of Credit Study that ranks the average credit scores of 143 cities in America. Wausau, Wisconsin had the highest average credit score of 789. Harlingen, Texas had the lowest credit score of 686. The national average was 749. These scores are based on the VantageScore with a 501-990 scoring range.
The study found that eight of the top ten cities with the highest average credit score were located in the Midwest. Four of the ten cities with the lowest average credit score were located in Texas.
There is a significant relationship between a city’s average credit score and its unemployment rate. Nine of the top 10 cities with the highest average scores have unemployment rates below the national average of 9.2%.
In 2011, the average debt for the U.S. was $25,542, down about 1 percent. Six of the ten cities with the lowest average debt were Midwestern cities. Seven of the ten cities with the highest average debt were cities in the South.
Here are some consumer tips for increasing your credit score:
* Get a copy of your credit report from all three credit agencies. U.S. residents are entitled to one free copy of their credit report from each credit reporting agency once every 12 months. This information is found by calling 1-877-322-8228 or at AnnualCreditReport.com. If any of the information on a report is incorrect, contact the agency to correct it; doing so may give your score a quick boost.
* Pay all your bills on time. This is the single most important factor in your credit score. Even if you only pay the minimum, pay your bills on time. Set payment reminders by email or text. Late and missed payments can quickly lower your credit score.
* Pay off your debt. High balances and high debt ratios drag down credit scores. Your debt balance should be less than 35% of your available credit. If you have a good payment history, contact your creditors and ask for lower interest rates. Then use what you saved in interest to pay down your credit card balances.
* Build a long-term relationship with the accounts you have. A long history of good payments on a car loan, a mortgage, or a credit card increases your credit score. Keep older credit card accounts open, even if you are not using them, because you are rewarded for a long, positive credit history. If you review your credit report and discover accounts that you no longer use, close the newest ones first.
* Limit your credit applications. Too many new accounts can lower your credit score. Each time you apply for a loan, the application shows up on your credit report. A significant increase in inquiries signals that you are desperate for money and are a credit risk. The exception is shopping for a mortgage or a car loan, as multiple inquiries for the same purpose in a reasonable period are considered a single inquiry.
* Get a checking and a savings account.
* Do not co-sign for a loan for someone else. This shows up on your credit report, and a missed payment or a maxed out credit card by the other person will negatively affect your credit score.
* If you can’t pay your bills, contact your creditor or see a legitimate credit counselor. The National Foundation for Credit Counselors, a not-for-profit organization, can give counseling and help you put together a debt management plan.
* Beware of credit repair scams and anyone who tells you they can improve your credit score for a fee. Investigate any company with your local consumer protection agency or Better Business Bureau.