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The methodology is arbitrary and is mostly a measurement of average credit score. Methodology: https://wallethub.com/edu/states-with-the-most-people-in-financi

The methodology is arbitrary and is mostly a measurement of average credit score. Methodology: https://wallethub.com/edu/states-with-the-most-people-in-financial-distress/130790 https://wallethub.com/edu/states-with-the-most-people-in-fin... This Equifax article lists CA has having a better average credit score than Texas. I did't bother to sort the Equifax to list to see how closely to correlates to the article, though. https://www.equifax.com/personal/education/credit/score/articles/-/learn/average-credit-score-state/ https://www.equifax.com/personal/education/credit/score/arti...

toomanyrichies 1y ago
Here's the sorted Equifax list: Minnesota 730 New Hampshire 727 Wisconsin 727 Vermont 726 Massachusetts 723 South Dakota 722 Washington 722 Colorado 720 Maine 720 Montana 720 North Dakota 720 Nebraska 720 Hawaii 719 Iowa 719 Utah 719 Idaho 718 Connecticut 717 New Jersey 717 Oregon 717 New York 713 Pennsylvania 713 Rhode Island 713 Wyoming 713 California 712 Illinois 712 Kansas 712 Virginia 712 Michigan 710 Alaska 709 Maryland 706 Ohio 706 Delaware 705 Missouri 705 Dist. of Col. 704 Indiana 704 Arizona 703 North Carolina 699 Florida 698 Tennessee 697 Kentucky 695 New Mexico 695 Puerto Rico 695 West Virginia 693 South Carolina 692 Nevada 691 Arkansas 688 Oklahoma 687 Georgia 686 Texas 686 Alabama 685 Louisiana 680 Mississippi 675
- ariwilson 1y ago
  Any ranking of states that ends with Mississippi is one I can get behind
elevation 1y ago
Credit score is not a useful measure of financial health. A minimum wage worker living paycheck to paycheck but making minimums on a large credit card balance will have a better score than a retiree who's long since paid off his house and car and pays cash for entertainment and playthings.
- toomuchtodo 1y ago
  The minimum wage worker will not be making the minimum payment successfully on their credit card balance (bottom sixty percent of Americans cannot afford a basic quality of life [1] [2]). They likely can't produce $500 for an emergency, and use credit products with interest rates as high as ~30-35% with credit lines no larger than a few hundred or thousand dollars. The retiree you mention in your example will have an 800+ FICO credit score due to longevity of their trade lines (decades) and likely no inquiries (because they don't need to seek credit) or missed payments. Cash flow underwriting would paint this picture better [3], but is still not widely performed outside of an org containing the deposit account (internal underwriting for credit products that don't have to conform for asset backed security sales). So, credit score is a reasonable proxy at this time for household financial health (imho) [4] [5] based on research performed by the CFPB. [1] https://www.cbsnews.com/news/cost-of-living-income-quality-of-life/ https://www.cbsnews.com/news/cost-of-living-income-quality-o... [2] https://lisep.org/mql https://lisep.org/mql [3] https://fintechtakes.com/articles/2024-05-22/cash-flow-underwriting/ https://fintechtakes.com/articles/2024-05-22/cash-flow-under... [4] https://www.consumerfinance.gov/about-us/blog/new-report-explores-relationship-between-financial-well-being-contents-engagement-credit-reports/ https://www.consumerfinance.gov/about-us/blog/new-report-exp... [5] https://files.consumerfinance.gov/f/documents/cfpb_credit-karma_report_2019-08.pdf https://files.consumerfinance.gov/f/documents/cfpb_credit-ka... (day job is in finance/consumer credit)

toomanyrichies 1y ago

Here's the sorted Equifax list: Minnesota 730 New Hampshire 727 Wisconsin 727 Vermont 726 Massachusetts 723 South Dakota 722 Washington 722 Colorado 720 Maine 720 Montana 720 North Dakota 720 Nebraska 720 Hawaii 719 Iowa 719 Utah 719 Idaho 718 Connecticut 717 New Jersey 717 Oregon 717 New York 713 Pennsylvania 713 Rhode Island 713 Wyoming 713 California 712 Illinois 712 Kansas 712 Virginia 712 Michigan 710 Alaska 709 Maryland 706 Ohio 706 Delaware 705 Missouri 705 Dist. of Col. 704 Indiana 704 Arizona 703 North Carolina 699 Florida 698 Tennessee 697 Kentucky 695 New Mexico 695 Puerto Rico 695 West Virginia 693 South Carolina 692 Nevada 691 Arkansas 688 Oklahoma 687 Georgia 686 Texas 686 Alabama 685 Louisiana 680 Mississippi 675

ariwilson 1y ago
Any ranking of states that ends with Mississippi is one I can get behind

elevation 1y ago

Credit score is not a useful measure of financial health. A minimum wage worker living paycheck to paycheck but making minimums on a large credit card balance will have a better score than a retiree who's long since paid off his house and car and pays cash for entertainment and playthings.

toomuchtodo 1y ago
The minimum wage worker will not be making the minimum payment successfully on their credit card balance (bottom sixty percent of Americans cannot afford a basic quality of life [1] [2]). They likely can't produce $500 for an emergency, and use credit products with interest rates as high as ~30-35% with credit lines no larger than a few hundred or thousand dollars. The retiree you mention in your example will have an 800+ FICO credit score due to longevity of their trade lines (decades) and likely no inquiries (because they don't need to seek credit) or missed payments. Cash flow underwriting would paint this picture better [3], but is still not widely performed outside of an org containing the deposit account (internal underwriting for credit products that don't have to conform for asset backed security sales). So, credit score is a reasonable proxy at this time for household financial health (imho) [4] [5] based on research performed by the CFPB. [1] https://www.cbsnews.com/news/cost-of-living-income-quality-of-life/ https://www.cbsnews.com/news/cost-of-living-income-quality-o... [2] https://lisep.org/mql https://lisep.org/mql [3] https://fintechtakes.com/articles/2024-05-22/cash-flow-underwriting/ https://fintechtakes.com/articles/2024-05-22/cash-flow-under... [4] https://www.consumerfinance.gov/about-us/blog/new-report-explores-relationship-between-financial-well-being-contents-engagement-credit-reports/ https://www.consumerfinance.gov/about-us/blog/new-report-exp... [5] https://files.consumerfinance.gov/f/documents/cfpb_credit-karma_report_2019-08.pdf https://files.consumerfinance.gov/f/documents/cfpb_credit-ka... (day job is in finance/consumer credit)