Yesterday CNN had an interesting report on the cities with the highest credit scores . If you haven’t seen it , here are the ten cities at the top of the list:
City & Rank Score
10. Sioux Falls , S.Dakota ……………. 773.44
9. Fargo , Noth Dakota ………………. 773.85
8. Harrisburg, Pennsylvania ………. 775.59
7. Seattle, Washington ……………… 775.66
6. Lincoln , Nebraska…………………. 776.16
5. Boston, Massachusetts……….. 777.79
4. San Francisco, California …….. 779.26
3. Minneapolis , Minnesota …….. 784.12
2. Madison , Wisconsin ………….. 785.30
1. Green Bay, Wisconsin ……….. 786. 06
The national average was 747.10 at the end of 2010, according to Experian, one of the three big credit-reporting agencies. That’s on a scale of 501 to 990. Experian, along with the other major credit-reporting agencies, Equifax and TransUnion, use a system called VantageScore to determine a person’s credit score. It takes into consideration your payment history, how much you use your credit cards, if you carry a balance, how long you’ve been using credit cards and how much credit is still available to you.VantageScore 2.0 blends data from two different timeframes — 2006 to 2008 and 2007 to 2009 — in order to distinguish those people who may have been fiscally responsible before the recession but fell on hard times in the past few years.
Congratulations , Green Bay . You not only won the Super Bowl ; you finished #1 in these rankings . However , it is an empty honor. The bottom five cities have a credit score range of only 2 – 1/2 points and , top to bottom , there is a difference of only 13 points. I would conclude that where a city finished in the top ten is irrelevant . However , there are some other conclusions that I can draw.
1. Along with the credit scores , the report also included ,the median income , the median price of a home , the percentage unemployment and the average monthly credit card charges for each of the cities. However it is quickly apparent that none of these is a factor in the creditworthiness of a city’s population.
For instance , the median price of a home varied from a love of $ 109,200 ( Green Bay ) to a high of $676,660 ( San Francisco).True , many of the cities had low home prices but three ( San Francisco, Boston and Seattle) were over three times as much as the least. Consider also that increasingly large numbers of the U.S. population live in rented apartments rather than in their own homes.
Unemployment varied from a low of 4.2% in Lincoln , Nebraska to 9.9 % in San Francisco. It ‘s difficult to see the connection between unemployment and credit scores except in the case of those who have recently lost their jobs . Many of the chronically unemployed do not have credit or a credit score.
The average monthly credit card charges are all over the place with charges being higher in large cities , lower in smaller ones. Ditto the median income .
2. Politics is not a factor. SanFrancisco is a liberal bastion, as is Seattle , but many of the others on the list are conservative strongholds.
3. I’d thought that city size would matter and that all the most credit worthy communities would be smaller cities. I was wrong as proved by the presence of San Francisco , Boston and Seattle on the list.
So what does matter ? What do these ten cities have in common ? Geography it seems . None of these cities is in the South . The southernmost of the cities is Harrisburg , PA. More to the point , all of them( except San Francisco) experience cold winters. Could it be that living in a cold climate forces people to be more aware of what it takes to survive? Could it force people to be more frugal in their lifestyle , to save up for the winter ? Does the story of the ant and the grasshopper apply to mankind as well ? To me , it makes at least as much sense as anything else .
Final words : “The average credit score, one of the best measures of financial responsibility, is finally starting to stabilize, after a steady slide from 2006 to 2009, suggesting consumer belt-tightening is starting to work.” … VantageScore 2.0.
Some good news at last.