Southern States Have The Worst Credit Card Problem, FICO Scores Suffer
January 31, 2011 6:31 am Leave your thoughts
According to a new study performed by Equifax, one of the three national credit-reporting agencies, many regions continue to battle credit card debt. The study profiles the top 50 MSAs (Metropolitan Statistical Area) based on their percentage of household income owed in credit card debt, also called the credit card debt to median income ratio. Of the 20 worst MSAs, 13 of them are in southern states.
The worst performing MSA was Wilmington, NC with over 17% of their median income ($42,392) owed in credit card debt ($7,315). The worst performing state in the top 20 was North Carolina with 6 MSAs in the worst 20 overall. Florida and Ohio each had 4 MSAs in the top 20.
Southern states also have the lowest average FICO scores in the country, which goes hand in hand with the region’s excessive credit card debt. The three worst performing states in the Equifax study, NC, OH and FL, all have average FICO scores below 695. In fact, North Carolina and Florida’s average FICO scores are 8th and 14th lowest respectively.
Debt is the second most important factor in the FICO scoring system. It is worth 30% of the points in your score, which is a close second to whether or not you’re making your payments. Credit card debt and the percentage of your credit limits used are key factors in the debt category. Additionally, having so much of your household income dedicated toward expensive credit card debt (avg interest rate for new cards in now almost 15%) prevents the household from building wealth.
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry
Categorised in: Credit Cards, Debt, Debt Management
This post was written by John Ulzheimer