Where Americans Have the Highest and Lowest Credit Scores

Where you live can go a long way in determining your credit rating.

With a low poverty rate and high employment rate, residents of Minnesota have a credit score of 724, on average, well above even wealthier states, such as California and New Jersey, according to a recent WalletHub report based on TransUnion data.

In fact, residents of Minnesota have the highest average credit score of any state in the country, followed by New Hampshire, Vermont and Massachusetts, WalletHub found.

Meanwhile, residents of Mississippi had the lowest credit score in the country – at 662 – along with Louisiana, Alabama and Arkansas, despite the relatively low cost of living.

Overall, the national average credit score sits at an all-time high of 716, unchanged from a year ago, according to a separate report from FICO, developer of one of the most widely used ratings by lenders. . FICO scores range from 300 to 850.

However, this is the first time since the Great Recession that scores have not improved year over year, according to Ethan Dornhelm, vice president of scores and predictive analytics at FICO.

Learn more about personal finance:
Here is the inflation breakdown for October 2022
How to save on groceries in the face of food price inflation
4 of the best ways to pay for Christmas gifts

“We are stabilizing back to pre-pandemic norms, which in itself is not a red flag,” Dornhelm said, despite “this slight deterioration in debt levels.”

“What we are monitoring is if there is continued deterioration,” he added.

As prices rise across the board, Americans are actually taking on more debt.

And yet, credit scores have remained stable despite the soaring cost of living, which has caused credit card balances to jump 15% as well as an increase in missed payments.

In April 2022, average credit card usage was just over 31%, up from 29.6% a year earlier.

Your utilization rate, the ratio of debt to total credit, is one of the many factors that can influence your score. Credit experts generally advise borrowers to keep revolving debt below 30% of their available credit to limit the effect high balances can have.

“We are watching closely what the next six months will bring,” Dornhelm said.

Many factors are at play, he added, including inflation, the labor market and housing, as well as the withdrawal of Covid-era government stimulus packages, including the payment pause on most federal student loans through December 31.

Generally speaking, the higher your credit score, the better off you are when it comes to getting a loan. You are more likely to be approved, and if you are approved, you may qualify for a lower interest rate.

A good score is usually above 670, a very good score is above 740, and anything above 800 is considered exceptional.

An average score of 716 on FICO measures means that most lenders will consider your creditworthiness “good” and are more likely to grant lower rates.

National average credit scores hit a low of 686 during the housing crisis more than a decade ago, when there was a surge in foreclosures. They rose steadily until the pandemic, when government stimulus programs and an increase in household savings helped scores reach an all-time high of 713.

Subscribe to CNBC on YouTube.