Experian’s Fifth Annual State of Credit study, released last week, shows an economy continuing on the upswing after years of recession. Consumers’ credit scores are rising, retail credit card lending is growing, and people are taking on more debt.
The average VantageScore (the score Experian uses to measure creditworthiness) is up two points, from 664 in 2013 to 666 this year. VantageScores range from 300 to 850. A score below 600 is considered subprime and makes it more difficult for consumers to get approval for loans, credit cards, and low interest rates.
Bank and retail card increases
More people opened new credit card accounts this year than last, with bankcard lending up 21% over 2013. One in 17 people opened one or more new bankcards last year, compared with one out of 21 in 2013. That brings the average number of bankcards per consumer up 4.2%, to just over 2 per person.
There was a 3.5% increase in retail card lending during the last year. The average person has 1.5 store credit cards, a 6.7% increase over 2013. Overall consumer debt is up as well, with the per-person average at $28,496 this year.
Credit scores by state
The Experian study looked at statistically significant metropolitan areas across the United States to see which areas had the highest—and the lowest—credit scores. Minnesota came out on top, with the residents of Mankato, averaging a credit score of 706. That’s a three-point improvement over last year, putting it 40 points higher than the national average. Three other Minnesota cities—Rochester, Minneapolis, and Duluth—followed Mankato to round out the top four creditworthy cities in the country. Almost all of the metropolitan areas in the top ten improved over last year. Only Sioux Falls, South Dakota, had a drop in average credit score since last year, and that was only by 1 point.
Greenwood, Mississippi came in last in creditworthiness, with its residents holding an average credit score of 609. Riverside, California, and Albany, Georgia, were next-to-last, with average scores of 620 and 621, respectively. Looking at the bottom ten cities, Albany was the most improved over 2013, with an average credit score increase of five points.
A notable year for credit
Experian’s director of public education, Rod Griffin, said folks shouldn’t place too much importance on any one city’s average credit score. “Experian analyzes vast amounts of consumer credit and macroeconomic data to help understand how consumers across the nation are managing credit,” he explained.
Overall, “this has been a notable year for borrowing, with more new credit being extended and consumers feeling more comfortable and confident about accepting those credit offers,” said Michele Raneri, Experian’s vice president of analytics.