At the national level, Americans are incurring more and more debt. Recent data from the New York Fed indicates that household debt reached a new high in the fourth quarter of 2017, standing at $13.15 trillion. This represents a 1.5% increase from the previous quarter and a 17.9% increase from the most recent low in Q2 2013.
Borrowing money is not inherently a bad thing if the borrower is able to make payments on schedule. However, incurring too much debt often creates a vicious cycle where missed payments result in penalties, interest, and higher monthly bills—all of which decrease the likelihood of making payments on time moving forward. In addition, payment history is the most important factor in determining an individual’s credit score, which in turn influences the ability for individuals to apply for mortgages, loans, and credit cards. A history of late payments will result in a lower credit score, making it more difficult to borrow at affordable rates (if at all).
The inability to pay off debt according to schedule is known as delinquency. The delinquency rate as used in this analysis is defined as the percent of loan balances more than 90 days overdue. At the national level, student loans have the highest delinquency rates at 9.23%, followed by credit cards (7.51%), auto loans (4.03%), and mortgages (1.17%).
While at a national level, delinquency rates have been trending down since the end of the Great Recession, there’s a lot of variation from state to state. Credit Sesame wanted to determine which states have the highest delinquency rates, based on the average of auto, credit, mortgage, and student loan delinquency data compiled by the Federal Reserve Bank of New York’s State Level Household Debt Statistics for Q4 2017. Credit Sesame also wanted to compare how those delinquency rates compared to the credit scores of its users in those states.
Generally, states in the South and West are worse off than Northeast and Midwest. Not surprisingly, the states with the lowest delinquency rates also tend to have the highest credit scores and vice versa. The following list represents the 15 states that have the highest delinquency rates.
15. Texas
- Auto loan delinquency rate: 4.74% (12th)
- Credit card delinquency rate: 8.41% (6th)
- Mortgage delinquency rate: 0.89% (30th)
- Student loan delinquency rate: 11.32% (23rd)
- Total per capita debt: $39,430
- Median credit score: 661
14. Arizona
- Auto loan delinquency rate: 4.57% (14th)
- Credit card delinquency rate: 9.54% (2nd)
- Mortgage delinquency rate: 0.83% (33rd)
- Student loan delinquency rate: 12.73% (18th)
- Total per capita debt: $48,710
- Median credit score: 667
13. Georgia
- Auto loan delinquency rate: 5.52% (7th)
- Credit card delinquency rate: 7.64% (15th)
- Mortgage delinquency rate: 0.99% (29th)
- Student loan delinquency rate: 13.05% (16th)
- Total per capita debt: $43,730
- Median credit score: 650
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12. Kentucky
- Auto loan delinquency rate: 4.37% (18th)
- Credit card delinquency rate: 7.09% (23rd)
- Mortgage delinquency rate: 1.2% (22nd)
- Student loan delinquency rate: 15.4% (3rd)
- Total per capita debt: $30,700
- Median credit score: 665
11. North Carolina
- Auto loan delinquency rate: 5.17% (8th)
- Credit card delinquency rate: 7.43% (17th)
- Mortgage delinquency rate: 1.16% (23rd)
- Student loan delinquency rate: 12.74% (17th)
- Total per capita debt: $41,360
- Median credit score: 661
10. Delaware
- Auto loan delinquency rate: 4.35% (19th)
- Credit card delinquency rate: 8.31% (9th)
- Mortgage delinquency rate: 2.12% (3rd)
- Student loan delinquency rate: 10.22% (33rd)
- Total per capita debt: $49,900
- Median credit score: 677
9. Alabama
- Auto loan delinquency rate: 5.75% (5th)
- Credit card delinquency rate: 7.68% (14th)
- Mortgage delinquency rate: 1.05% (27th)
- Student loan delinquency rate: 13.87% (10th)
- Total per capita debt: $32,810
- Median credit score: 658
8. Arkansas
- Auto loan delinquency rate: 4.39% (17th)
- Credit card delinquency rate: 8.66% (5th)
- Mortgage delinquency rate: 1.11% (26th)
- Student loan delinquency rate: 14.44% (6th)
- Total per capita debt: $30,080
- Median credit score: 660
7. South Carolina
- Auto loan delinquency rate: 5.62% (6th)
- Credit card delinquency rate: 7.8% (12th)
- Mortgage delinquency rate: 1.28% (18th)
- Student loan delinquency rate: 13.91% (9th)
- Total per capita debt: $38,880
- Median credit score: 656
6. Louisiana
- Auto loan delinquency rate: 5.86% (4th)
- Credit card delinquency rate: 7.78% (13th)
- Mortgage delinquency rate: 1.55% (12th)
- Student loan delinquency rate: 13.37% (14th)
- Total per capita debt: $33,770
- Median credit score: 653
5. Oklahoma
- Auto loan delinquency rate: 4.89% (10th)
- Credit card delinquency rate: 7.86% (11th)
- Mortgage delinquency rate: 1.34% (14th)
- Student loan delinquency rate: 15.33% (4th)
- Total per capita debt: $31,580
- Median credit score: 659
4. West Virginia
- Auto loan delinquency rate: 5.06% (9th)
- Credit card delinquency rate: 8.11% (10th)
- Mortgage delinquency rate: 1.33% (15th)
- Student loan delinquency rate: 16.38% (2nd)
- Total per capita debt: $26,010
- Median credit score: 656
3. Mississippi
- Auto loan delinquency rate: 6.43% (2nd)
- Credit card delinquency rate: 7.36% (18th)
- Mortgage delinquency rate: 1.52% (13th)
- Student loan delinquency rate: 16.84% (1st)
- Total per capita debt: $27,580
- Median credit score: 643
2. Nevada
- Auto loan delinquency rate: 4.84% (11th)
- Credit card delinquency rate: 10.76% (1st)
- Mortgage delinquency rate: 1.61% (9th)
- Student loan delinquency rate: 14.63% (5th)
- Total per capita debt: $48,000
- Median credit score: 654
1. New Mexico
- Auto loan delinquency rate: 6.15% (3rd)
- Credit card delinquency rate: 9.02% (4th)
- Mortgage delinquency rate: 1.64% (6th)
- Student loan delinquency rate: 13.91% (8th)
- Total per capita debt: $36,470
- Median credit score: 660
Methodology & Full Results
Total per capital debt as well as auto, credit, mortgage, and student loan delinquency rates were sourced from the Federal Reserve Bank of New York, State Level Household Debt Statistics. Delinquency rate is defined as the percent of loan balances 90+ days delinquent. The rates shown are from Q4 2017, the most recent available. The median credit score for each state was sourced from the Credit Sesame Credit Score Survey from January 2018. The scores shown are VantageScores.
The overall ranking for each state is based on its loan delinquency rates only. For each loan type, the states were ranked by their delinquency rate. For each state, these individual rankings were then averaged to created the state’s overall average ranking. States were then ordered by their average ranking; the number one ranking corresponds to the state with the highest delinquency rates.
