Top 10 states in the most 'financial distress'
According to WalletHub’s data, here are the 10 states with the most people in financial distress. These states were chosen based on nine key metrics including average credit score, bankruptcy filings, and the number of people with distressed accounts.
The list is in order, starting with the state that has the highest number of distressed residents.
- Texas
- Louisiana
- Nevada
- Kentucky
- Florida
- Tennessee
- Mississippi
- Oklahoma
- South Carolina
- Arizona
A clear pattern emerges when looking at this list. Southern States, and red states, fare worse. In fact, Texas ranks number one in terms of the number of people with accounts in distress, while Kentucky is a close second.
Texas also comes in at 25 in terms of credit score rank, while Louisiana is 34th, Tennessee is 31st and Oklahoma 28th.
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Learn MoreWhy are people struggling so much in these states?
It's helpful to understand not just how each state stacks up, but also why some states tend to do worse than others.
Texas, for example, has the eighth-largest economy in the world, but many of its residents are in financial distress anyway, as demonstrated by a substantial increase in business bankruptcies and a sharp increase in Texans searching for loans, among other factors. One reason Texans may be having such trouble is housing costs have been rapidly rising as more people relocate to the Lone Star state.
Louisiana, on the other hand, saw many residents grappling with poor credit and a high number of delinquencies. The average credit score among residents is just 624, which is the third lowest in the U.S., and almost 12% of residents had a credit account in distress. Nevada residents faced similar issues, with the average credit score of 644 in the state making Nevada the state with the 15th lowest scores in the country.
Unfortunately, there are many reasons beyond expensive housing that account for why Southern States are disproportionately poorer. The rural south has been hit hard for decades as industries it relied upon, including manufacturing and farming, have been automated or shipped overseas. These declines have had long-term consequences across the region even as urban centers in many Southern areas are growing.
For residents of these states, though, what's important is finding a way to cope with these struggles. There are solutions for those dealing with debt, including refinancing or entering into a payment plan. Those who are stuck with low credit scores can also take steps to rebuild, such as getting a secured card and paying it responsibly.
The reality is that there are always going to be some states where people have more money worries. But, those living in them can and should find ways to get ahead if they can, such as investing for the future and keeping fixed costs as low as possible.
These moves can make a big difference in each resident's financial life even if their state as a whole keeps struggling.
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