U.S. Cities with the Best & Worst Credit Scores
- April 12, 2017
- Posted by: Mike Brown
- Category: Credit Scores
A simple three digit number can tell a whole lot about a person’s monetary situation.
Your credit score can have a tremendous impact on your purchasing power and financial reputation. For those who do not know, a credit score is a numerical expression that represents the overall creditworthiness of an individual. In short, it's important.
A wide range of financial institutions and organizations use a people's credit scores to evaluate the risks of conducting business with them. For example, a bank or credit card company would pull a credit score to evaluate an individual's history with making credit card or student loan payments .
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Additionally, insurance companies, landlords, and government organizations will examine credit scores before doing business with other parties. The "better" your score is, the better your chances are of being approved for whatever you are trying to do.
How is your credit score calculated?
The FICO score has been the traditional scoring method used by credit bureaus for decades. However, the VantageScore 3.0®1 model has become popular recently. VantageScore 3.0® evaluates a person’s credit score by looking at a number of factors including the consumer’s recent credit debt, the consumer’s payment history, and the utilization of the consumer’s current credit.
LendEDU thought it would be interesting to look at credit scores on a broader scale. Using Experian’s Premier Aggregated Credit StatisticsSM, as well as Onboard Informatics location data, LendEDU created a comprehensive report detailing the average credit scores for cities and towns throughout the United States.
LendEDU put together a ranking of the 500 American cities that have the best average credit scores. Also included was a list of the 500 cities in the U.S. where credit scores are the worst. Additionally, LendEDU has ranked the 100 most populous U.S. cities based on their respective average credit score.
Using the VantageScore 3.0® scoring method, Experian calculated the average credit scores that were featured on all three lists. To be considered, a town or city had to have a population greater than 20,000.
LendEDU’s lists will show you the 500 cities in the United States that are most creditworthy and whose residents are the most financially secure. On the other end, you can also see the 500 American cities where residents are struggling the most fiscally. And, you can also see how the United States' largest cities stack up against each other financially.
Below, you can find the complete rankings for LendEDU’s “U.S. Cities With the Best and Worst Credit Scores” report.
500 Cities With the Best Credit Scores
500 Cities With the Worst Credit Scores
Credit Score Rankings for the 100 Largest U.S. Cities
All data within this report was pulled from Experian’s Premier Aggregated Credit StatisticsSM and Onboard Informatics. Location data was cross referenced between Onboard Informatics and Experian’s Premier Aggregated Credit StatisticsSM to formulate a list of ZIPTM2 codes accompanied by city names, state names, updated population figures as reported by Onboard Informatics, and VantageScore 3.0® scores as reported by Experian. After a list was created, a population cutoff of 20,000 was implemented, phasing out the least populous cities in the United States.
For cities containing multiple ZIPTM codes, an average weighted credit score was determined by averaging credit scores together after weighting them based on population. Within a city, ZIPTM codes with higher populations were given more weight compared to ZIPTM codes with less representation. Large regions that were closely associated with the included metropolitan areas were left independent due to their large population and regional distinction (e.g. Chicago Heights was not lumped in with Chicago).
After the weighted VantageScore 3.0® scores, or credit scores, were calculated for each city, rankings could be determined based on the magnitude of these credit scores. Simply put, cities with greater credit scores were ranked higher on the list than those with lower credit scores.
What is the Best Credit Score?
You’ve probably heard someone boast about how they have “perfect” credit. That would mean they have a FICO score of 850. In order to achieve that they would need to have at least five credit card accounts, one mortgage or auto loan, 30 years of credit history, 20 years of positive account history, no late payments for the last seven years, and a debt level that doesn’t exceed 35 percent of their total available credit. So, the next time some young 30-year old tells you he has perfect credit, you’ll know he’s full of it.
While having perfect credit is a laudable goal, most people would be ecstatic to be able to cross the 800 score threshold. It doesn’t happen overnight, but it’s also not that difficult if you know what to do. It also helps to understand how credit scores are generated and utilized.
What Your Credit Score Really Means
With the big fixation on credit scores, consumers may be misleading themselves as to their true credit worthiness. You might be ecstatic to learn that your credit score increased from 660 to 700; but to the lender, your credit is still just “above average” and is in a “medium” risk range. It’s important to know your credit score, but you should be more concerned with the different credit score ranges for each risk level. The possible credit scores that FICO calculates using its proprietary algorithms are arranged by risk levels, which are also based on an algorithmic formula.
|Credit Score Range||Risk Level||Probable Outcome|
|579 and below||Very poor||Little possibility of obtaining credit|
|580 to 619||Poor||May be approved with high interest rate|
|620 to 659||Average||Can be approved with high interest rate|
|660 to 699||Good||Will be approved with average interest rate|
|700 to 759||Great||Will be approved with low interest rate|
|760 and above||Excellent||Will be offered the best interest rates|
This is FICO’s current credit score range, and it always remains somewhat fixed. But, the range is also subject to interpretation by individual lenders. For instance, prior to the 2008 credit crisis, a credit score of 730 would have garnered the best available mortgage rates. But following the crisis, lenders wanted to see credit scores above 760 before offering the lowest rates. As the economy improves and lenders’ overall credit risk decreases, they tend to loosen their requirements.
Not All Credit Scores are Equal
FICO was the original credit scorer and is still considered to be the standard bearer for consumer credit scoring. Initially, FICO sold its credit scores to the credit bureaus – TransUnion, Expedia and Equifax – who in turn sold them to consumers and lenders. Eventually, the credit bureaus used their own massive databases to come up with their own credit scoring models. Initially, they banded together to come up with the VantageScore®. Later, Experian came up with its own model called PLUS.
Today there are three credit scoring models in use – FICO, VantageScore 3.0® and Plus. Although their algorithms for scoring are closely held secrets, they generally follow the FICO model. The scoring differs as do the scoring ranges for some models. The FICO credit score ranges from 300 to 850, and the VantageScore 3.0® credit score covers the same range of 300 to 850. However, the Experian PLUS credit score ranges from 330 to 830.
Which Credit Score is the Most Important?
FICO remains the primary scorer for more than 90 percent of lenders. However, an increasing number of lenders now use both FICO and VantageScore®. Lenders are also taking the data supplied by FICO and Vantage and interpolating it with their own formulas; so it is difficult to know which scoring model is being applied. The Experian Plus score is not used by lenders because it was developed as an educational tool for consumers.
The Path to an 800 Credit Score
Obtaining a top credit score is not that difficult once you understand what goes into scoring your credit. However, it does take time and there is very little room for error. Here’s exactly what you need to push your score to the top.
Never Miss a Payment
Your payment history comprises a whopping one third of your credit score. Just one missed payment can drop your score by as much as 110 points. The only thing worse than a missed payment, which remains on your credit report for seven years, is a bankruptcy.
Maintain a Low Debt-to-Credit Limit Ratio
Credit utilization is the next biggest factor in scoring your credit. To keep you score moving higher, it’s recommended that your debt ratio be no more than 35 percent; 25 percent is better. The average debt ratio for those with the highest credit scores is 7 percent.
Diversify Your Credit
Your ability to handle a variety of credit is another big scoring factor. You will need a good mix of credit, such as credit cards, installment loans, an auto loan or a mortgage. If you’re currently limited in your mix, you might consider going to a bank or credit union and taking out a small, secured personal loan using your savings as collateral, or purchase your next appliance on an installment loan.
Keep Your Accounts Open and Active
People with a lot of credit cards are sometimes tempted to close accounts they don’t use. While that may seem the prudent course, it can also hurt your credit score because it can lower the amount of available credit while increasing your credit utilization ratio. Credit activity is also important because that is what drives your payment history score. It’s recommended you use your credit cards each month but then pay the balance in full.
Monitor Your Credit
You should check your three free credit reports each year to ensure there are no errors. Credit reporting errors occur more frequently than we’d like to think, and any incorrect item – a wrong Social Security number, a misreported payment or credit limit, or a rogue inquiry – could hurt your credit score. If you are real serious about reaching the 800 mark, then you should consider subscribing to a credit monitoring service that costs about $10 a month.
Give Yourself Some Time
Even if you apply these essential credit building rules, you may not be able to break 800 for a few years. It usually requires at least 10 years of a “perfect” credit history to achieve an 800 score. While it may not actually take that long, you need to give yourself the proper time horizon and know that your score will grow each day.
1. VantageScore is a registered trademark of VantageScore Solutions, LLC.
2. Experian is a nonexclusive full-service provider licensee of the United States Postal Service. The following trademark is owned by the United States Postal Service: ZIP. The price of Experian's services is not established, controlled or approved by the United States Postal Service