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Some States’ Credit Conditions More Vulnerable to the Pandemic than Others, CardRatings Study Finds

A new state-by-state study from CardRatings.com shows U.S. states are best and worst for credit…

  • October 17, 2020

A new state-by-state study from CardRatings.com shows U.S. states are best and worst for credit conditions, and which are best prepared to withstand the economic rollercoaster of 2020.

Just as COVID-19 preys heavily on those with preexisting conditions, the leader in credit card ratings finds the economic burden may hit households hardest that started the year with the weakest credit.

Most Improved and Worst Declines

Delaware had the biggest decline in ranking: the state’s unemployment rate rose more than any other state’s, dropping from 16th to 42nd for employment conditions

Kentucky is the biggest improver since last year’s analysis, though its climb of 15 places only brought it up to the middle of the pack at 25th overall; the Bluegrass State jumped from 42nd to 1st for low unemployment due to an unusually steep drop in Labor Force participation rate and a big jump in employment in June

Differences Among States 

Alabama sees nearly 10x as many bankruptcies as Alaska, relative to population

The average credit score in Minnesota is 60+ points higher than that in Mississippi

Alaskans carry credit card debt equal to nearly 15% of their annual income, compared less than 9% in the District of Columbia

A house in New Jersey is 17x as likely as one in South Dakota to go through foreclosure

Massachusetts’ unemployment rate is 4x the jobless rate in Kentucky

2020’s Best States for Credit Conditions

This is the fourth straight year North Dakota tops the list for the study. The state ranks in the top 10 in four out of five categories. Vermont takes the second spot again with its second lowest bankruptcy rate and second highest average credit score.

  1. North Dakota
  2. Washington
  3. Vermont
  4. Nebraska
  5. South Dakota
  6. Iowa
  7. Minnesota
  8. Maine
  9. Montana
  10. District of Columbia

2020’s Worst States for Credit Conditions

Nevada is the worst state for credit conditions for the third consecutive year. It ranked among the ten worst states in all five categories. Louisiana tied for the second worst in 2019 and sits in the same spot this year.

  1. Nevada
  2.  Delaware (tie)
  3. Louisiana
  4.  Mississippi (tie)
  5. Florida
  6. Tennessee
  7. Georgia
  8. Illinois
  9. Alabama
  10. New Jersey (tie)
  11. South Carolina (tie)

To measure the combined impact on credit conditions, CardRatings looked at:

Bankruptcies per capita, based on data from the American Bankruptcy Institute

Average credit scores from Experian

Credit card balances as a percentage of average income, based on credit card data from Experian and wage data from the Bureau of Labor Statistics

Foreclosure data from Attom Data Solutions

State unemployment rates from the Bureau of Labor Statistics