Having a good credit score is important for getting approved for loans and credit cards. Credit scores generally range from 300 to 850, with higher scores being better. The average credit score in the US is around 690. But this average varies by state, with some states having much higher average credit scores than others.
What Factors Affect Credit Scores?
The most commonly used credit score model is FICO. FICO credit scores take into account five main factors:
- Payment history – Whether you pay your bills on time. This is the most important factor, accounting for 35% of your FICO score.
- Credit utilization – The amount of available credit you are using. This accounts for 30% of your score.
- Credit history length – How long you’ve had credit accounts open. This is 15% of your score.
- Credit mix – The different types of credit you have, such as credit cards, loans, mortgages, etc. This is 10% of your score.
- New credit – How many new accounts you have opened recently and how many credit inquiries you have. This accounts for 10% of your score.
In general, having a long credit history, low balances compared to credit limits, few late payments, and not opening too many new accounts will help boost your credit score.
Data on Credit Scores by State
Experian’s State of Credit report for 2022 provides data on average credit scores by state. Here are the top 10 states with the highest average credit scores according to this report:
| Rank | State | Average Credit Score |
|---|---|---|
| 1 | Minnesota | 717 |
| 2 | New Hampshire | 714 |
| 3 | Vermont | 712 |
| 4 | Massachusetts | 710 |
| 5 | Hawaii | 709 |
| 6 | Washington | 708 |
| 7 | North Dakota | 707 |
| 8 | Wisconsin | 706 |
| 9 | Iowa | 705 |
| 10 | Maine | 704 |
Minnesota Has the Highest Average Credit Score
As the data shows, Minnesota has the highest average credit score at 717, followed closely by New Hampshire, Vermont, and Massachusetts. All of the top 10 states have average scores of 704 or greater.
Some common factors among the states with the highest average credit scores:
- Higher income levels – There is generally a correlation between income and credit scores. Higher incomes make it easier to manage credit and debt.
- Lower debt-to-income ratios – People in these states tend to borrow and use credit responsibly compared to their incomes.
- Lower delinquency rates – People in these states are less likely to pay bills late or default on loans.
- Older residents – Longer credit histories and experience using credit can boost scores.
- Higher education levels – Education correlates with financial literacy and responsible credit behaviors.
So the combination of higher incomes, lower debt burdens, responsible credit usage over time, and greater financial literacy common in these states contribute to their high average scores.
States with the Lowest Average Credit Scores
At the other end of the spectrum, here are the 10 states with the lowest average credit scores according to Experian:
| Rank | State | Average Credit Score |
|---|---|---|
| 50 | Mississippi | 666 |
| 49 | Louisiana | 668 |
| 48 | Nevada | 673 |
| 47 | Texas | 675 |
| 46 | Alabama | 677 |
| 45 | Oklahoma | 679 |
| 44 | South Carolina | 680 |
| 43 | Indiana | 681 |
| 42 | Missouri | 682 |
| 41 | Georgia | 683 |
Here we see the states with lowest average credit scores are generally in the South. Contributing factors likely include:
- Lower average incomes
- Higher debt-to-income ratios
- Higher delinquency rates
- Younger populations just starting to build credit
- Lower financial literacy
These factors make it harder for people in these states to build strong credit histories and maintain high credit scores.
Conclusion
In summary, Minnesota has the highest average credit score at 717 while Mississippi has the lowest average at 666. Higher incomes, lower debt levels, financially responsible behavior over time, and greater financial literacy contribute to the high scores seen in states like Minnesota. Improving these factors can help build credit in lower scoring states.
Maintaining a good credit score takes diligence in paying bills on time, keeping credit utilization low, and building a lengthy credit history. But as the state data shows, broader socioeconomic factors also influence scores. With responsible credit behaviors and improving financial capability, lower scoring states can increase their averages over time.