Although Americans face many challenges as a result of the coronavirus pandemic, consumers are said to be managing their credit quite well, which is surprising.
Experian, which recently completed its 12th annual credit report, found that average U.S. credit scores rose seven points since 2020 to reach 695, the highest point in more than 13 years. .
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The report explained that many consumers were managing their credit relatively well before the pandemic hit. With the addition of the CARES (Coronavirus Aid, Relief and Economic Security Act) law, consumers still seemed to be in good shape in terms of financial well-being.
It should also be noted that many Americans were ordered to stay at home at the start of the pandemic, resulting in record savings levels and lower levels of total and unsecured debt, as well as Lower credit utilization rates and fewer missed payments.
This year, Experian partnered with Operation Hope, the nation’s largest nonprofit dedicated to improving financial literacy, to launch the first HOPE Financial Wellbeing Index. The index aims to highlight the average credit score in each state and city.
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âWe believe that credit education plays an important role in fostering financial inclusion and helping consumers reach their full potential,â said Alex Lintner, president of Experian Consumer Information Services.
Here are the states with the highest average credit scores.
Minnesota – 726
Vermont – 719
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New Hampshire – 718
Washington – 717
Massachusetts – 716
Here are the states with the lowest.
Mississippi – 666
Louisiana – 669
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Alabama – 672
Oklahoma – 672
Texas – 673
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In addition to each state’s average credit scores, the credit report also found that scores improved year over year for each generation, due to declining usage rates. and fewer missed payments.
Credit utilization rates have declined for every generation except Gen Z, which has seen rates rise year over year. Likewise, credit card balances have also increased for Gen Z by $ 115 year-over-year, despite decreasing for all other generations.
Generation Z is the last generation, born between 1997 and 2012. They are currently between 6 and 24 years old.
Overall, consumers miss fewer payments, with significant improvements among the younger generations.
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âWhile these results are positive, we recognize that they don’t tell the whole story and that many consumers face financial hurdles due to a limited credit history,â Lintner said.
Additionally, many individuals and communities struggle with financial literacy issues due to a lack of education and resources.
As we slowly begin to recover from the pandemic and overcome the challenges of the past year and a half, the current state of consumer credit is critical.
Fortunately, Operation Hope seeks to find solutions for consumers, striving to improve their financial health and literacy and helping them manage their credit scores in order to position them well financially.
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âBy helping people improve their credit scores, we are empowering them to take advantage of one of the most democratic tools in our country. From housing and employment to health care and education, creditworthiness can be harnessed to improve our overall quality of life.
“We are committed to using the HOPE Financial Well-Being Index as a force for good in the communities we serve,” concluded John Hope Bryant, Founder and CEO of Operation HOPE.