What's Your State's Average Credit Score?

Here's a startling statistic - the average credit score - considering every State in the Union - is 676.

Yet, the minimum credit score for A-Paper, conventional mortgages is 680! Experian has just created a National Score Index, listing the average credit scores based on 10 geographical areas of the country. Only 4 areas out of 10 exceed the 680 minimums.

The 5 states with the highest credit scores are:

South Dakota - 708
Minnesota - 707
North Dakota - 706
Vermont - 704
New Hampshire - 702 (tied)
Massachusetts - 702 (tied)

The 5 lowest states are:

Texas - 650
Nevada - 655
Arizona - 658
New Mexico - 662
North Carolina - 664

The score index chart is updated monthly - but here is the latest chart listed by the 10 regions of the country.

Experian not only provides you with the score index averages by area, but the scores for the individual states when you visit www.NationalScoreIndex.com. It shares debt, credit usage, minimum monthly payment, open credit cards, late payments and credit inquiry graphs.

So, how can you use this information in your mortgage practice? When you visit the site, you will find 2 tabs that are of particular interest. Check out the where you enter the zip code and instantly compare your area with the national average. The other is called which provides credit score information for an entire State.

First of all, it's a great resource to share with your clients. If they have a higher-than-average credit score, praise them for exceeding the state or national average and tell them how you can get them one of the best interest rates because of it. You may even suggest that they visit the website.

If they have a lower-than-average credit score, it's a good resource to share with them as to why they may have to pay a higher interest rate.

Secondly, if your mortgage practice is located in one of the lower credit score states, I recommend that you line up 4 to 6 sub-prime lenders and learn all you can about their products. While I'm sure there are plenty of 680-plus buyers in Texas - my thoughts are that this would be a "niche" market for you and sub-prime mortgages would be the mainstream market.

If you were considering consumer direct marketing and placing an ad in your local real estate magazine (in the lower credit score states), the headline would read, "Are You Embarassed Because You Think Your Credit is Less-Than-Perfect? Call for the Free Report on How to Get a Mortgage Anyway!"

And, some people have called me a "dreamer" - but I believe that DU and LP should take another look at the credit scoring averages and adjust their underwriting formulas to fit with the regional issues and not a "one-size-fits-all" underwriting standard.

Warning: This chart changes monthly, so check it out regularly for the most current information.

Karen Deis

Copyright, 2005, LoanOfficerMagazine.com

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