10 most toxic states for your credit record
(MoneyWatch) People like to think that they're in control of their personal finances -- that if they're responsible about saving and paying their bills on time, they will stay economically healthy. But in truth, your neighbors can have a huge impact on your economic health, says Richard Barrington, senior financial analyst at CardRatings.com.
When people don't pay their mortgages, short-sales and foreclosures climb, cutting the value of all the houses in the area and making it difficult for you to sell or refinance. When the people in your community bounce checks or don't pay their credit card bills, local businesses go under, taking jobs with them and hiking the unemployment rate. And no matter how economically responsible you are, if you end up unemployed for a long stretch, you could find your finances savaged, too.
That's why credit card comparison site CardRatings.com ranked all 50 states by their credit conditions. These are the 10 states most toxic to your credit health, based on bankruptcy and foreclosure rates, unemployment, and credit scores.
10 most toxic states for your credit record
10. Arkansas
Bank repossessions of homes soared in former President Bill Clinton's home state during the first half of 2013, in contrast to the broadly improving housing market nationwide, according to RealtyTrac.com. Couple that with an average credit score of 617 -- a rate considered "subprime" -- and almost 1 percent of credit card payments 90 days late and you've got the reason that Arkansas ranked the nation's 10th most toxic state for credit health, according to CardRatings.com.
10 most toxic states for your credit record
9. Arizona
Credit scores and late payments are less of a problem in Arizona than they are in Arkansas, but the unemployment rate exceeds the national average, with roughly 7.8 percent of the state's job seekers out of work. In addition, one in every 742 homes is in foreclosure.
10 most toxic states for your credit record
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8. Mississippi
The average credit score in Mississippi is an abysmal 601, 120 points below the level where you can get the best rates on loans. Credit card delinquency rates are also among the highest in the nation, with 1.16 percent of cards at least 90 days delinquent. Worse, the unemployment rate remains naggingly high at 9.1 percent.
10 most toxic states for your credit record
7. Illinois
Roughly 1 in every 606 houses is in foreclosure, unemployment is at 9.1 percent and 1.3 out of every 1,000 residents have declared bankruptcy. On the bright side, credit card delinquencies are about average, with just 0.7 percent of credit card debts 90 days delinquent. The average credit score in Illinois is a middling, not terrible, 641.
10 most toxic states for your credit record
6. Alabama
Fewer homes in Alabama are in foreclosure, but bankruptcies are common with 1.51 in every 1,000 residents having sought debt relief. The average credit score is 614, and 0.97 percent of residents credit card bills are 90 days delinquent.
10 most toxic states for your credit record
5/4. Florida (tie)
Thanks to improvements in the state's unemployment rate, Florida is only No. 5 on the list. One in every 302 houses is in foreclosure, according to CardRatings.com. In fact, RealtyTrac reports that all five of the top metro areas for foreclosures in the U.S. are in the state: Miami, Orlando, Jacksonville, Ocala and Tampa. The average credit score is 621, while 0.94 percent of credit card loans in the state are 90 days delinquent.
10 most toxic states for your credit record
5/4. Indiana (tie)
Like much of the Midwest, Indiana suffered serious flooding last spring, which may have contributed to the state's higher than average unemployment rate of 8.3 percent. Roughly 1.4 of every 1,000 residents are bankrupt. The average credit score is 626, while 0.79 percent of credit debts are 90-days delinquent. However, the foreclosure rate is lower than in Florida, with just one in every 915 homes in foreclosure.
10 most toxic states for your credit record
3. Tennessee
The unemployment rate is a high 8.3 percent and the bankruptcy rate, at 1.74 in every 1,000 residents, is among the highest in the nation. The average credit score is 620, with roughly 0.78 percent of credit card bills at least 90-days delinquent.
10 most toxic states for your credit record
2. Georgia
All the factors affecting credit health point to misery in Georgia, where one in every 694 homes is in foreclosure and 1.66 out of every 1,000 residents are in bankruptcy. Unemployment is 8.3 percent. The average credit score is a sorry 610, and almost 1 percent of all credit card bills are 90-days delinquent.
10 most toxic states for your credit record
1. Nevada
For the second year running, Nevada wins the dubious honor of being the nation's most toxic state for credit health, with one in every 305 homes in foreclosure and the highest unemployment rate in the nation at a whopping 9.6 percent. Some 1.67 out of every 1,000 residents is bankrupt. On the bright side, while Nevada's unemployment rate is 2 percentage points higher than the national average, the rate has come down precipitously over the past year. In June of 2012, Nevada's unemployment rate was 11.4 percent.
Wondering where your state ranks? You can find CardRatings' 50-state ranking here.