Average Credit Scores Vary Across States

An array of common indicators provide insight into a region's economy. A drop in credit scores can also explain a region's economic situtation.
by | April 26, 2012

An array of common indicators -- unemployment rates, retail sales, home construction -- provide insight into a region's economy.

When the economy began to slow, many Americans also saw their credit scores drop. Homeowners defaulted on their mortgages and foreclosure rates skyrocketed in many areas of the country.

Credit reporting company Experian compiles a national score index and state averages from a sample of three million credit profiles. Minnesota's average score of 718 tops Experian's most recent list. The U.S. average is 687, with southern states typically reporting lower scores. (Refer to the map below for each state's average scores.)

For most regions, credit scores mirror unemployment rates. It's not surprising that Nevada, home to the nation's highest jobless rate, also reports the lowest average credit score. Areas of the upper Midwest and Northeast, not hit as hard during the recession, boast the highest scores.

It's important to note Experian's scale of 330 to 830 is different than the more-popular FICO scale. FICO does not report state totals, though.

A smaller set of credit scores for only mortgage applicants tells a different story.

Earlier this year, Mortgage Marvel compiled and analyzed more than 330,000 mortgage applications received in 2011. The mortgage-shopping website's data shows applicants' credit scores declined in most states last year.

Mark Calabria, the Cato Institute's director of financial regulation studies, said the numbers suggest lenders are more willing to lend to borrowers with lower credit scores, and these individuals are now more apt to apply for mortgages. He cited Phoenix and Nevada as two such markets.

"It really looks like they've hit the bottom," he said. "Lenders will be comfortable to lend in those markets."

California (754), Oregon (750) and Wisconsin (749) led the country with the highest average Mortgage Marvel FICO scores, based on a scale of 300 to 850.

Calabria said the mortgage applicant average scores are mostly driven by an area's housing market, urbanization and residents' financial literacy.

Income levels also explain the disparity in state averages for mortgage applicants, Calabria said. Mississippi and Arkansas -- the states with the lowest scores -- also report the nation's least median household incomes, according to the most recent Census Bureau figures. Similarly, the wealthiest states (New Hampshire, Connecticut and Maryland) all rank within the top 10.

Of course, the credit reporting agencies' samples are not representative of a state's entire population. Since wealthier individuals are more inclined to apply for mortgages, the numbers are not reflective of many low-income families or renters.

The following 10 states topped this list of average Experian credit scores:

STATE Experian Average (330-830) 2011 Mortgage Marvel Score (300 to 850) 2010 Mortgage Marvel Score (300 to 850)
Minnesota 718 739 745
North Dakota 715 711 723
South Dakota 714 739 742
Vermont 712 740 744
New Hampshire 711 741 744
Massachusetts 710 740 744
Montana 709 726 741
Iowa 708 725 733
Nebraska 708 724 723
Wisconsin 707 749 747

Experian Average Credit Scores

Click a state to display averages:

 
Average Credit Score
 
 
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