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Experian Evaluates Credit, Educates Consumers with State of Credit Map

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Experian recently released its second annual State of Credit Map, which ranks major U.S. cities by average credit score, from highest to lowest. The numbers are based on a sampling from Experian’s consumer credit database. So how did America do? It turns out many Wisconsin cities have great credit, while a number in Texas are lagging behind. Wausau took first place, and three other Wisconsin cities appeared in the top ten. Mirroring Wisconsin, four Texas cities filled out the bottom ten, with Harlingen earning the dubious rank of worst credit in the nation.

Bad credit and unemployment 

Does Texas have a higher percentage of irresponsible spenders? Possibly, but it’s difficult to find evidence for that within Experian’s data. In fact, it’s practically impossible to isolate any clear cause for low credit scores. However, there does seem to be some correlation between unemployment levels and credit card debt. Nine of the ten cities with the best credit scores have an unemployment rate below the national average of 9.2%. Sioux Falls in South Dakota, ranked ninth, has an amazingly low unemployment rate of 4.5%. By contrast, a number of southern states that made it into the bottom ten, like Georgia and Mississippi, have some of the highest unemployment rates in the nation. If you don’t have a job, it’s hard to find enough money to pay your bills, which makes you more likely to rely on credit cards. It’s not hard science, but it makes perfect sense.

Credit and poverty

Four of the ten cities with the worst credit made it into the Census Bureau’s 10 poorest metropolitan areas: El Paso, Corpus Christi and Harlingen in Texas, and Bakersfield in California. These towns have high immigrant populations, and many residents have been struggling with poverty for decades. However, the downturn in the economy has been rough in many cities, especially in places that rely on tourism. Las Vegas, number eight on the bottom ten, has suffered greatly from a drop in visiting vacationers. They also have a high foreclosure rate. However, it’s difficult to tell whether poverty causes bad credit or the other way around: missing payments triggers high interest rates and late fees, but without an income, you’re more likely to miss your payments or default.

At least the news for the bottom ten cities isn’t all grim. Many cities’ credit scores, though at low levels, have remained steady. Compared with last year’s assessment, some of the worst cities remained virtually unchanged: Harlingen and Corpus Christi improved by 2 points; Jackson, Mississippi, improved by 3 points; and Bakersfield improved by 1 point.

Experian’s call to action: credit education for the masses

Experian posted this map as part of their ongoing program to educate consumers about credit. “This nationwide credit assessment sheds light on the cities most affected by low credit scores and provides insight into the successes and challenges various regions have faced,” says Maxine Sweet, Experian’s vice president of public education. “We see this as an opportunity to help consumers better understand how credit works so they can make informed, responsible decisions – in other words, live credit smart.” In addition to the State of Credit Map, Experian’s website includes credit tips for individuals and couples, and an extensive credit Q&A page, complete with footage from an online “town hall” meeting. More educational programs and tools should be released late this year and in early 2012.