Based on its member information, Credit Sesame identified the best and worst states for debt in 2017. Although not all debts are represented by these figures, the findings are startling.
We looked at 12 million accounts, or different kinds of debt, together with housing costs and credit utilization.
What states have the most and least debt?
Our methodology takes into account average credit card debt, auto loans, mortgages, credit utilization ratios, and student loan debt.
In terms of credit use and average credit card debt, Washington and Massachusetts performed well, but they came in last for mortgage debt. Louisiana was listed as having the most credit card debt, auto loans, and utilization combined.
| The Worst States For Debt | |
|---|---|
| Car Loan Debt | Texas ($22,917) |
| Alaska ($22,267) | |
| New Mexico ($22,202) | |
| Wyoming ($21,708) | |
| Louisiana ($21,365) | |
| Mortgage Debt | District of Columbia ($368,695) |
| California ($367,271) | |
| Hawaii ($332,141) | |
| Washington ($271,771) | |
| New Jersey ($252,276) | |
| Credit Utilization Ratios | Indiana (52%) |
| Mississippi (40%) | |
| Arkansas (38%) | |
| West Virginia (38%) | |
| Louisiana (38%) | |
| Alaska (38%) | |
| Average CC Debt | Indiana ($5,250) |
| Alaska ($4,348) | |
| West Virginia ($3,565) | |
| Arkansas ($3,386) | |
| Louisiana ($3,270) | |
| Mississippi ($2,949) | |
| Student Loan Debt | District of Columbia ($47,331) |
| Maryland ($40,473) | |
| Georgia ($39,720) | |
| South Carolina ($36,865) | |
| Virginia ($36,828) | |
It is relatively predictable that Hawaii, California, and the District of Columbia have the worst mortgage rates. In addition to having a higher average cost of living, these states’ real estate prices have recently increased dramatically.
Considering taking on debt to pay for college? Maybe not if you are from one of the states with the lowest rates of student loan debt, like Wyoming, Utah, or Rhode Island.
| The Best States For Debt | |
|---|---|
| Car Loan Debt | Oregon ($10,705) |
| Michigan ($14,567) | |
| Rhode Island ($14,825) | |
| Wisconsin ($15,243) | |
| Minnesota ($15,858) | |
| Mortgage Debt | West Virginia ($88,149) |
| Mississippi ($88,362) | |
| Kentucky ($96,208) | |
| Arkansas ($97,254) | |
| Oklahoma ($107,215) | |
| Credit Utilization Ratios | Washington (28%) |
| District of Columbia (28%) | |
| California (29%) | |
| Massachusetts (29%) | |
| Minnesota (29%) | |
| Average CC Debt | Minnesota ($3,795) |
| California ($3,990) | |
| District of Columbia ($3,994) | |
| Massachusetts ($4,006) | |
| Washington ($4,266) | |
| Student Loan Debt | Wyoming ($28,303) |
| Utah ($29,158) | |
| Rhode Island ($29,158) | |
| Montana ($29,801) | |
| Idaho ($29,935) | |
Credit utilization: What is it?
Utilization is the ratio of your revolving debt to available credit. Your utilization ratio is 50% if your limit is $1,000 and you have a balance of $500. Utilization makes up 30% of your credit score, thus it’s critical to maintain a minimal amount. The closer to zero, though, the better; there is no magic number. With a credit utilization rate of 70% or 80% or above, it is quite challenging to have excellent credit.
How else does credit score change?
Your payment history, any negative marks or accounts, the average age of your credit accounts (and the age of your oldest account), the type of credit products you use, and the frequency with which you’ve recently applied for new credit are additional factors that can affect your credit score.
Methodology
Using Credit Sesame data, we looked at the following accounts:
1.3 million persons and 1.6 million loans were for autos.
360,000 people have mortgages; 400,000 loans.
2 million people have credit cards; 6 million have loans (or credit cards)
1 million borrowers and 4 million loans are for students.
There are roughly 12 million accounts overall.
