The Ten American Cities With The Worst Credit Scores

After the credit crisis, it’s been encouraging to see that across America credit scores have been slowly improving. Despite the improvements, many scores are still lacking. As to be expected, some cities that have been hard hit by the crisis still have very low credit scores — up to 18% lower than the national average. Using data from Experian, a credit information group, 24/7 Wall St. reviewed the ten cities with the worst credit scores.

Read: The Ten American Cities With The Worst Credit Scores

The cities with the worst credit scores primarily fall into two categories. In the first category, the cities’ median household incomes are significantly lower than the national average of $51,425, and the cities’ average debt is medium to high. Very poor cities such as El Paso, TX, and Jackson, MS fall into this category. Because they are so poor, with such low income, their debt level, even if it is the same as that in other cities with better credit scores, is a larger burden and is more difficult to pay.

The cities in the second category have exceptionally high foreclosure rates and high unemployment rates. The national foreclosure rate, as of August 2011, was one in every 570 properties, according to RealtyTrac. But in cities like Las Vegas and Bakersfield, the foreclosure rate is one in every 115 and one in every 159, respectively. These cities also have unemployment rates above 14%, much higher than the national average of 9.1%.

It is interesting that a city must have both a high foreclosure rate and high unemployment rate to be among those with the worst credit scores, according to 24/7 Wall St.’s analysis. For example,  Charlotte, NC, which has an unemployment rate of 11.1% but an average foreclosure rate only has the 93rd worst credit score. This a far cry from Las Vegas’s rank of 136.

To better understand what might impact a city’s credit score, 24/7 Wall St. first reviewed the data from Experian. We then included unemployment rates from the Bureau of Labor Statistics, foreclosure rates from RealtyTrac, and median household incomes from the Census Bureau.

These are the ten American cities with the worst credit scores.

10. El Paso, TX
> Avg. credit score: 710
> Unemployment: 10.6%
> Foreclosure rate: 1 in every 4,080
> Median household income: $36,147
> Avg. debt: $23,639

El Paso has a fairly large average debt, especially when compared to its median household income, which is approximately $15,000 lower than the national average. Unemployment in the city is also one and a half percentage points higher than the national rate. The number of credit cards used by El Paso residents dropped significantly from an average of 3.77 cards per person in 2007 to 1.54 in 2011.

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9. Tyler, TX
> Avg. credit score: 710
> Unemployment: 8.3%
> Foreclosure rate: 1 in every 4,196
> Median household income: $40,829
> Avg. debt: $26,048

Tyler has one of the highest average debts in the country. It also has a median household income nearly $11,000 less than the country’s median income. On the other hand, the East Texas city has both a below-average unemployment rate and below-average foreclosure rate.

8. Las Vegas, NV
> Avg. credit score: 709
> Unemployment: 14.2%
> Foreclosure rate: 1 in every 115
> Median household income: $54,327
> Avg. debt: $24,975

The housing market in Las Vegas has seen one of the worst downturns in recent years. A staggering one in every 115 houses was foreclosed in August 2011, significantly more than the national average of 1 in every 570. The city also has an exceptionally high unemployment rate of 14.2%. Worse still, the average number of late debt payments in 2011 was 0.66 per person — one of the highest rates in the country. While this is a decrease of 12% from 2010, it is an increase of 20% from 2007.

7. Bakersfield, CA
> Avg. credit score: 709
> Unemployment: 14.4%
> Foreclosure rate: 1 in every 159
> Median household income: $51,886
> Avg. debt: $25,697

Like Las Vegas, Bakersfield has a dismal foreclosure rate. It also has an exceptionally high unemployment rate of 14.4%. The average number of late payments per resident in the city is 0.62 for 2011. This rate is one of the worst among U.S. cities. However, it is a major improvement for Bakersfield, as its late payment rate was nearly 20% higher in 2010.

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6. Augusta, GA
> Avg. credit score: 709
> Unemployment: 9.6%
> Foreclosure rate: N/A
> Median household income: $36,823
> Avg. debt: $26,204

Augusta’s median household income is more than $14,000 lower than the national average. Yet the city has the eighth highest average debt in the country. While the city’s credit score has not changed from last year, the average non-mortgage debt decreased 2.2%.

5. Shreveport, LA
> Avg. credit score: 706
> Unemployment: 6.7%
> Foreclosure rate: 1 in every 1,169
> Median household income: $35,219
> Avg. debt: $23,607

Shreveport’s average credit score of 706 is the fifth-lowest in the country. This is in part due to the city’s average late payment rate of 0.6 in 2011, which is one of the highest in the country. Shreveport has severe poverty issues, as evidenced by the city’s median household income of $35,219, or more than $15,000 lower than the national average.

4. Monroe, LA
> Avg. credit score: 706
> Unemployment: 10.2%
> Foreclosure rate: 1 in every 2,483
> Median household income: $29,158
> Avg. debt: $23,760

The average debt in Monroe, LA, is just $6,000 less than its median household income. Additionally, that income is significantly lower than the national average. Unemployment, too, is above average in the city. The good news for Monroe is that its average debt has fallen 5.5% since 2010 — one of the higher rates of decline in the country.

3. Corpus Christi, TX
> Avg. credit score: 702
> Unemployment: 8.2%
> Foreclosure rate: 1 in every 1,157
> Median household income: $42,694
> Avg. debt: $24,289

Corpus Christi, located on the southern part of the Texas Gulf Coast, has the third lowest average credit score in the country. While the number of average late payments dropped by 14% — one of the biggest decreases among U.S. cities — it still has one of the worst. While compared to some of the other cities on this list Corpus Christi’s median income of $42,594 may sound high, it is still nearly $10,000 less than the U.S. average.

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2. Jackson, MS
> Avg. credit score: 701
> Unemployment: 7.6%
> Foreclosure rate: 1 in every 1,357
> Median household income: $33,505
> Avg. debt: $25,588

Jackson is another southern city with an exceptionally low median household income and a high average debt. The average debt has increased 0.6% since 2010. Worse still, the average number of open credit cards has also increased, although only slightly.

1. Harlingen, TX
> Avg. credit score: 686
> Unemployment: 12.5%
> Foreclosure rate: 1 in every 676
> Median household income: $22,316
> Avg. debt: $25,074

Harlingen, Texas has the worst average credit score in the country, at just 686. It is this only city in the U.S. with an average score below 700. To illustrate how bad things are in the city, its average debt of $25,074, is actually higher than its abysmal median income of $22,316. Since 2008, the average debt in Harlingen has gone up 6.8%.