via Moak:Survey ranks Miss. credit scores, clarionledger.com, 1/12/2016
In 1978, Bob Seger’s everyman anthem “Feel Like a Number” complained about how our lives are reduced to numbers. “To workers, I’m just another drone; to Ma Bell I’m just another phone; I’m just another statistic on a sheet,” he sang.
Thirty-eight years later, that claim has only become more accurate. Today’s consumers (at least in the eyes of potential lenders) are reduced to a three-digit number called a credit score.
Your score gives lenders a picture of how big of a credit risk you might be. This little number has a lot of power, and can either help or hurt you borrow money, buy a house, or even rent an apartment or get affordable insurance.
Most businesses that use credit scores use the FICO (Fair Isaac & Company) score, which looks at many different data points and assigns the consumer a number ranging from 300 to 850. The idea is the higher the number, the less likely you are to be a credit risk. Someone with a score of 300 is unlikely to get any credit from reputable lenders; someone with 850 can pretty much get whatever they want.
The personal finance site Wallethub.com keeps an eye on the American credit landscape. Recently, they released an interesting survey in which they analyzed data from TransUnion (one of the “Big 3” credit bureaus) for 2,570 cities across the U.S. In general, higher scores track with high personal income, although they’re heavily influenced by the amount of debt measured against household income and other factors. Ultimately, financial experts believe that the higher the score, the better your and my financial habits.
According to Wallethub, the best credit scores in the nation were in The Villages, a planned retirement community in Central Florida, with an average credit score of 779.51 on the 300-850 scale. The worst was Camden, New Jersey, with an average score of 565.62.
Included were 32 Mississippi cities. The only Magnolia State city included in the top 500 was Madison, which ranked at No. 447 nationally, with an average FICO score of 705.65. A distant second was Brandon (1,069th), with an average score of 680.33. Rounding out the top 10 Mississippi cities were Hernando (1,182nd); Oxford (1,495th); Olive Branch (1,515th); Ocean Springs (1,574th); Clinton (1,652nd); Starkville (1,814th); Ridgeland (1,897th); and Corinth (2,014th).
At the bottom of the list were Horn Lake (2,493rd); McComb (2,494th); Greenwood (2,527th); Greenville (2,534th); and Jackson, which ranked just 31 slots from the bottom.
“With this report we wanted to find out consumers’ financial habits and how well they manage their debts based on their credit score,” noted Wallethub Analyst Jill Gonzalez. “The cities with excellent average credit scores are places where people are taking their finances seriously and successfully managing their debts. Cities with low credit scores are still struggling from an economic point of view, thus the residents have a hard time keeping up with their debt and making payments on time.”
Wallethub pointed out that the term “city” was applied to only to the boundaries of the actual city, not metro areas or surrounding rural areas. Not all Mississippi cities appeared on the list, and some smaller-population cities (such as Lucedale) appeared, while larger cities (such as Clarksdale and Cleveland) did not. Wallethub’s rep Diana Popa told me, “Some cities were not included due to data limitations.”
It’s not surprising the higher scores are generally in communities with higher personal income; however, many financial experts allege the credit scoring system is flawed because it represents a “snapshot” in time (which might reflect temporary conditions), and is prone to errors made during data entry. In some cases, the credit bureaus responsible for the data have been challenged in court, such as when Mississippi Attorney General Jim Hood sued “Big-3” credit bureau Experian in 2014 because of alleged mistakes and inclusion of erroneous information in credit reports, and failing to adequately investigate and address challenges by consumers of erroneous information.
And, of course, these are just averages, and from one source. If you happen to live in a city with a low average score, you could have top-drawer credit; and if you happen to live in a city higher on the list, your score could be scraping the bottom of the credit-score barrel. After all, credit scores cannot reveal the “true” you, and are certainly not an indicator of the worth of a person — or even whether it would be a good choice to lend you money. They are just one of several indicators to be considered in making a decision.
To see how your city fared, visit https://wallethub.com/free-credit-score/#methodology.