The Cities With the Lowest Credit Scores

by Shelton on December 8th, 2014

filed under Credit Scores

The average US consumer credit score increased 2 points from 2013, according to Experians Fifth Annual State of Credit study. Americans have an average 666 VantageScore 3.0, up from 664 last year, on a scale of 300 to 850. Thats generally considered fair credit.

With this increase in score came an increase in consumer debt, up 2.3% to $28,496 per person (thats credit card debt, auto loans, personal loans and student loans). On the flip side, mortgage originations are down 39% from last year, with only one in every 79 households getting new home loans.

Experian also analyzed average credit scores among the 100 largest metropolitan statistical areas, and there was nearly a 100-point difference between the lowest and highest average scores. Four of the 10 cities with the best scores are in Minnesota (Mankato, Minn., took the top spot with a 706), and the rest are in the northern Midwest: Iowa, North Dakota, South Dakota and Wisconsin. Actually, those four Minnesota cities have the four highest scores overall.

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The bottom 10 those with the lowest credit scores also have the geographic unity of being mostly Southern cities. Here they are:

9. Columbus, Miss. amp; Bakersfield, Calif. (635)
8. Alexandria, La. (634)
6. Las Vegas amp; Jackson, Miss. (632)
5. Laredo, Texas (630)
4. Harlingen, Texas (625)
3. Albany, Ga. (621)
2. Riverside, Calif. (620)
1. Greenwood, Miss. (609)

All the cities in the top 10 saw average improvements, with the exception of Sioux Falls, SD, which dropped a point from its average score. On the other end, Albany recorded the most improvement among the bottom-10 cities, with a five-point jump in its average.

To see where you fall among your national and state average VantageScore 3.0, you can see your credit scores for free through Credit.com. You can get two free credit scores with updates every 30 days, allowing you to track your personal progress, as well as your score relative to other US consumers.

More on Credit Reports amp; Credit Scores:

  • What’s a Good Credit Score?
  • How to Get Your Free Annual Credit Report
  • How Credit Impacts Your Day-to-Day Life

Image: InfoGuides

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Ally Rides Car Lending Surge While Feds Cut Stake ALLY WFC

by Shelton on December 8th, 2014

filed under Car Lending

Double-digit gains in automobile financing led Ally Financial (NYSE:ALLY) to accelerate to solid third-quarter earnings growth as the auto lender moves to jettison the US governments stake in its business.

The Detroit-based company, formerly known as GMAC Inc., swung to a profit of 53 cents a share, beating views by 12 cents, from a loss of 27 cents a share a year ago, when results were hit by legal settlements with US regulators over mortgage issues.

Shares rose 0.9% on the stock market today. The companys stock is down 10% since its initial public offering in April.

Things to be thankful for this Thanksgiving: Jobs, credit cards disclosing …

by Shelton on December 8th, 2014

filed under Credit Scores

  • The unemployment rate has dipped below 6 percent. While there is debate about the accuracy of the stats, and I get annoyed about the retro revisions, more people are finding jobs. And thats a good thing.

  • People with higher-interest mortgages have another year to refinance even though they might still be under water with the loan. The Home Affordable Refinance Program was supposed to end next month, but in April, it was extended to Dec. 31, 2015.

  • The stock market has continued to climb, with the major indexes up 9to 13 percent this year.

  • More consumers seem to be pushing back on the materialistic mindset that retailers and the news media hype around the holidays. Yes, lots of stores are open on Thanksgiving Day this year. Yes, people with strange priorities are already camping out in front of stores nationwide. But did stores like Lowes need to have Christmas displays in September? Did Macys need to be playing Christmas music on Election Day? Disgust is being voiced louder and by more people. Retailers will listen to our wallets.

  • You cant be charged an overdraft fee on a debit card purchase at a store or restaurant without your up-front permission.

  • Credit scores part 1: Another giant credit card issuer, Citi, last month announced plans to provide credit scores free to customers. For Citi, this will be 23.5 million people. Discover did the same a year ago. Now Chase and Bank of America are evaluating following suit.

    As I and many others predicted, this is the new competitive edge and it will quickly be an expectation among customers. Citis decision is big in a year when federal regulators have been pushing banks to be more transparent to customers. That transparency can help people better understand what influences credit scores, improve their ratings and discover identity theft or other problems.

  • Credit scores part 2: Free credit reports from the credit bureaus are required bylaw. Could free credit score disclosure become mandatory in the near future, as it did with credit reports in 2003?

  • The end of painfully low interest rates for savers is in sight. Savers who rely on interest income have been crushed the last seven or so years by crumb-like interest rates. We should start seeing some increases next year.

  • Safer credit and debit cards are coming sooner vs. later. Retail payment breaches are horrible, but the crimes have pressured retailers and banks into rolling out cards with computer chips — which are safer — sooner than we would have seen them otherwise.

  • The personal savings rate jumped to 5.6 percent of disposable income in September. In the spring of 2008, it was zero. A big fat smelly zero. That means consumers overall spent more than they earned back then.

  • Credit card companies can no longer arbitrarily raise customers interest rates on existing balances or confuse customers with due dates that change every month.

  • Banks have stopped pushing debit cards as much as they used to, and more people are picking up the potential danger of a debit card tied to their primary checking account.

  • Mortgage rates remain incredibly low, right around 4 percent, which is lessthan a year ago. The average rate hasnt been above 7 percent, historically considered a good rate by economists, since 2000.

  • People can no longer buy a home when they have a 500 credit score and no document-able income.

  • Credit card companies must by law tell customers every month how many years it will take to pay off their bill and how much it will cost in interest if only the minimum payment is made.

  • More banks are charging monthly fees for checking accounts. Most of the major local banks, including PNC , Key, Fifth Third, Charter One, Chase and US Bank have moved back to monthly fees, which generally apply to those who dont keep certain average balances or minimum monthly deposits. You might say this practice penalizes lower-income folks. But how fair is it for customers to pay outrageous fees for things like overdrafts or cashiers checks just because a bank wants to pretend it has free checking. Checking was never free.

  • The Consumer Financial Protection Bureau is taking on the once-powerful credit bureaus (Equifax, Experian and TransUnion), which have operated with too much secrecy and too little accountability for way too long. If youve got a complaint about a credit bureau (and who doesnt), you can file those with the CFPB.

  • Regulators are finally, finally requiring new home loan disclosure documents that people without finance degrees can understand. As one local mortgage banker said, the new documents will strip out all of the banker mumbo-jumbo so home buyers can easily understand the interest rate and closing costs.

  • Credit card companies no longer issue without blinking $25,000 lines of credit to college students or others who dont have the income to repay the debts.

Murray has covered personal finance for The Plain Dealersince 1999. Because of the volume of requests, she cannot help everyone who contacts her.

To reach her:moneymatters@plaind.com
On Facebook: MurrayMoneyMatters
On Twitter: @teresamurray
Previous columns online: cleveland.com/moneymatters