Not only is a good credit score a sign of healthy money management -- it's also necessary if you want to afford many of life's necessities. For example, if you want to buy a home this spring, a higher credit score will get you a lower mortgage rate, which saves you money. The same is true for car loans; a higher credit score can get you a lower APR on your auto loan.
Using Experian data on local credit scores, GOBankingRates calculated the average credit score by state to find the 10 states where people have the best credit scores -- and the 10 where residents have the worst credit.
Click through to see where your state ranks for its credit score.
This article was originally published by GOBankingRates.
States with the best credit scores
What is a good credit score? Credit score ranges are typically between 300 and 850, and the 10 states with the best credit scores all have credit scores of 690 or above, comfortably in the range of "good credit." With good credit scores in this range, residents of these state will find it easier to qualify for loans as well as get lower interest rates and other favorable terms
If you live in the Midwest, you're more likely to have a higher credit score. Of the 10 states with the highest average credit scores, six are located in the Midwest. The states with higher credit scores also tend to have lower rates of debt delinquency (debts that are past due or possibly in collections).
Best/No. 10: Montana, 688.4
The average credit score in Montana is still high enough to qualify as good credit, making it easier for residents to get loans and keep borrowing affordable.
Fewer Montanans, just 30.3 percent, have debts that are past due or in collections, about 8 percent less than the national average of 38.5 percent, according to data from the Urban Institute's 2014 "Delinquent Debt in America" report. Montana also has the lowest number of borrowers that are 60 days or more delinquent on personal loans, according to credit bureau TransUnion's Q4 2015 report on consumer lending, mortgages, credit cards and auto loans.
Best/No. 9: Hawaii, 689.7
Hawaii residents also have good credit, even though they borrow on credit cards more than most Americans. The average credit card balance nationwide is $5,337, according to TransUnion's data, but Hawaii cardholders owe $409 more with average balances at $5,746 in the state in Q4 2015.
And while they have higher credit card balances, Hawaii residents also have the third-highest median income of $71,223 in 2014, according to U.S. Census data. Just 27.3 percent of Hawaii borrowers have past-due debts and debt in collections compared to the national average of 38.5 percent.
Best/No. 8: Iowa, 690.2
Iowa residents have earned their higher credit scores by paying debts on time. Only three in 10 Iowans (30.4 percent) have debts past due or in collections, according to Urban Institute data. Iowa residents also have below-average credit card delinquency rates and the lowest average credit card balances in the nation at just $4,386, according to TransUnion data.
Best/No. 7: Nebraska, 690.7
Nebraska residents are less likely than most Americans to have debts past due; just 28.2 percent of the state's residents have debts past due or in collections. Nebraska also has a mortgage delinquency rate that's less than the national average (1.26 percent compared to 2.37 percent, respectively), as well as lower credit card balances and delinquencies.
Best/No. 6: New Jersey, 693
With a higher median household income at $65,243, Garden State residents might find they have more room in their budgets to keep up with debts and responsibly manage credit. On major debt payments like car loans, personal loans and credit cards, New Jersey has delinquency rates that fall below the national averages.
Still, many New Jersey homeowners have struggled to keep up with mortgage payments, and at 4.7 percent, the state has the highest number of residents 60 days delinquent on mortgages, according to TransUnion data.
Best/No. 5: Vermont, 693.4
Fewer Vermont borrowers have debts past due or in collections -- just 28.2 percent, according to numbers from the Urban Institute. With fewer Vermont residents facing delinquent debts, it's easier for them to keep credit scores healthy and well within the range of a prime credit score.
Best/No. 4: South Dakota, 694.3
The average credit score in South Dakota is 694.3. It shows that the residents in this state are better at managing credit. An important part of this is making payments on time, as many South Dakotans do on their auto loans. The state has a delinquency rate of just 0.95 percent on car loans past 60 days delinquent, according to TransUnion. In comparison, the national rate is 1.24 percent.
South Dakota credit cardholders also keep balances low; the average card balance in this state is $600 less than the national average of $5,337.
Best/No. 3: Wisconsin, 695.8
Wisconsin residents borrow less on credit, as shown with low balances that average $4,589, $748 less than the national average. By owing less, Wisconsin cardholders keep credit card debt manageable, which helped the state achieve the lowest credit card delinquency rate at 0.92 percent, according to TransUnion data.
Best/No. 2: North Dakota, 696.5
North Dakota residents are the least likely to miss a mortgage payment, earning it the lowest delinquency rate on mortgages at 0.97 percent. North Dakota also has some of the lowest delinquency rates on debts like credit cards, auto loans and personal loans.
Overall, less than a quarter -- 24.2 percent -- of borrowers in North Dakota have debts that are past due or in collections, according to Urban Institute data. With more people in this state wisely managing their credit and debts, North Dakota earns the second-highest average credit score at 696.5.
Best/No. 1: Minnesota, 704
Minnesota's average credit score is most squarely in the range of "good credit," tipping past the 700 mark. In fact, all four Minnesota cities for which Experian reported an average credit score had a score of 701 or above, with Mankato, taking the No. 1 spot with an average score of 706.
With a median income of $67,244, Minnesotans can afford more debt -- yet they avoid racking it up. Minnesota's average balances on mortgages, credit cards and auto loans are all well below average, according to TransUnion data. And when they do accrue debt, Minnesota residents responsibly make payments; Minnesota has a low rate of debts that are past due or in collections, with over three in four (76.1 percent) of borrowers in this state avoiding this common credit issue.
These behaviors show residents are more likely to have lower credit utilization ratios and histories of on-time payments, which are major factors that boost credit scores.
10 states with the worst credit scores
What is a bad credit score? While the top 10 states have high credit scores that border on excellent, the 10 states with the worst credit scores have "fair" to "poor" credit ranges. Among the states with the worst credit scores, a high majority -- eight out of 10 -- are located in the South, showing a significant trend of poor credit in this region.
These states with the lowest credit scores also had lower median household incomes; nine states had incomes below the national median of $53,657, according to Census Bureau data. Low incomes are a significant risk factor for mismanagement of debt. With fewer financial resources, low earners are more likely to take out loans or rely on credit, but will also have a diminished ability to meet their credit obligations and stay current on payments.
Worst/No. 10: New Mexico and Arkansas, 653.7 (tied)
Missed payments and delinquent debts are big contributors to the low credit scores in New Mexico and Arkansas. The Urban Institute reports that nearly half (47.3 percent) of New Mexico residents have debts that are past due or in collections. In fact, borrowers with personal loans in this state have a delinquency rate of 6.41 percent for this type of credit, which is much higher than the national average of 3.87 percent.
In Arkansas, 45.8 percent of residents have debts that are past due or in collections. And, the average personal loan balance in the state is a staggering $20,117 while the national average is just $13,649, according to TransUnion.
Worst/No. 9: Tennessee, 653.6
Like many other Southern states, Tennessee has lower incomes and lower credit scores to match. Tennessee's median household income of $43,716 is the sixth-lowest in the nation. With less money coming in, Tennessee earners will be on tighter budgets and will be able to afford less debt.
If they do take on debt, there's a higher risk of delinquency; Tennessee has higher rates of delinquencies than the national average for personal loans, credit cards and auto loans, according to TransUnion data.
Worst/No. 8: Alabama, 652.4
Alabama is another Southern state with one of the worst average credit scores. In this state, nearly half (47.6 percent) of borrowers have debts that are past due or in collections -- 9 percent more than the national average of 38.5 percent, according to Urban Institute data. Alabama has an above-average mortgage delinquency rate -- the rate is 2.53 percent, compared to the national average of 2.37 percent.
Worst/No. 7: South Carolina, 650.3
South Carolina's average credit score of 650.3 is squarely on the border between "poor" and "fair," making it harder for many of the residents in this state to qualify for credit and secure favorable terms. Even worse, South Carolina has a low median household income of just $44,929, which makes it challenging for earners to find room in their budgets to pay down debts and manage credit wisely.
A majority of South Carolina borrowers, 52.7 percent, have debts that are past due or in collections.
Worst/No. 6: Oklahoma, 649.5
Another state with low credit scores, the median household income in Oklahoma is $47,199. Oklahoma residents struggle with debt delinquency more than most Americans, and the problem could be worsening. Oklahoma's credit card delinquency rate saw a 14.6 percent year-over-year change.
Worst/No. 5: Texas, 646.9
Texas is the only state among the 10 with the worst credit scores with a median income ($53,875) that exceeds the national benchmark ($53,657). Despite this, Texas still has one of the worst average credit scores in the nation.
The saying that everything's bigger in Texas holds true for auto loan balances -- Texas borrowers carry the highest balances on their car loans at $22,989, just under $5,000 more than the national average of $17,999, according to TransUnion. With higher loan balances, the risk of missed payments rises as well.
Texas also has a high percentage of borrowers with debts past due or in collections at 52.3 percent, according to Urban Institute data. This state has the highest delinquency rate for personal loans as well, with 6.92 percent of borrowers with these types of loans being 60 days or more past due.
Worst/No. 4: Nevada, 644.3
More than 52 percent of people in Nevada have debt past due or in collections, meaning most Nevada borrowers have an overdue debt on their credit histories that's counting against their score.
Nevada residents also have household debt balances that are higher than the national average, according to a report from the New York Federal Reserve Bank. With bigger debts but smaller incomes (the median is $49,875), borrowers in Nevada are less likely to maintain the ability to pay off debts.
Worst/No. 3: Louisiana, 643.6
Along with earning a low median income ($42,406), a majority of Louisiana residents (52.5 percent) have debts that are past due or in collections. With less money coming in, Louisiana borrowers have fewer funds to put toward debts, which is a major factor putting the state at No. 3 among those with the worst credit scores.
Worst/No. 2: Mississippi, 637.1
With the lowest incomes in the nation ($35,521 for the median household), Mississippi residents are the poorest and most financially insecure in America.
Mississippi debtors have higher-than-average rates of delinquency on mortgages, auto loans and credit cards. For credit cards, Mississippi has the highest rate of credit card delinquencies at 2.57 percent, 63 percent higher than the national rate of 1.58 percent in Q4 2015. It also has one of the highest levels of auto loan delinquencies -- along with Louisiana -- according to data from both Experian and TransUnion.
Worst/No. 1: Georgia, 636
With a 636 average that falls in the credit score range of "poor credit," Georgia consumers have the lowest credit scores in the nation. Georgia has many borrowers with debts that are past due or in collections -- 48.1 percent.
The average credit card balance in Georgia ($5,637) is above the national average, as is the state's average car loan debt ($19,679).
As for delinquency rates, Georgia has an above-average mortgage delinquency rate (2.6 percent), car loan delinquency rate (1.78 percent), credit card delinquency rate (2.2 percent) and consumer lending delinquency rate (5.09 percent).
To generate average credit scores by state, GOBankingRates sourced average credit scores for 213 U.S. cities reported by Experian in its 2015 State of Credit report. These credit scores by city were grouped together by state. GOBankingRates then averaged together all cities' credit scores reported in each state, including the District of Columbia but excluding Delaware and New Hampshire for which no city credit scores were reported. These credit score averages were then ordered from highest to lowest to find the states with the best and worst credit scores.
Click here to where 48 states and the District of Columbia rank. (Delaware and New Hampshire are excluded due to insufficient credit score data.)