Growing up, if you were tardy to school too many times, you’d probably get a detention. As an adult, there’s a significantly greater consequence: Just one late credit payment can cause your credit score to nosedive 60 to 120 points (depending upon what your score initially was and the type of payment that was late). Despite this negative financial outcome, the average delinquency rate for the entire United States is 2.89 percent.
Of all the late payers out there, which cities’ residents are struggling the most to make on-time payments? Credit Sesame dug into data taken from more than 8 million members to see who has the highest number of delinquent accounts and why their residents can’t seem to dig themselves out of the red.
While you constantly hear about Americans addiction to plastic (according to Credit Sesame’s internal data, the average Credit Sesame member has about $5,218 in credit-card debt), it’s not Visa or Mastercard that’s preventing people from paying their bills in a timely fashion. Shockingly, however, is the fact that it’s student loan debt — 47 percent of all education loans are late — that are driving people to fall behind on their disbursements.
Fortunately for citizens in the following 10 cities, it’s possible to remove late payments from their credit report and rebuild their credit.
10. Memphis, TN
Number of accounts that are late: 3.80%
Median household income: $37,099
Unemployment rate: 6.8%
With only a quarter of its population holding a Bachelor’s degree (or higher), it’s not much of a surprise that the home of Elvis Presley has the highest unemployment rate of 10 cities on this list. Interestingly, despite its poorly educated population, two-thirds of all late accounts held by Memphis residents are student loans.
9. Tulsa, OK
Number of accounts that are late: 3.85%
Median household income: $48,926
Unemployment rate: 5.3%
Only an hour and a half separates Tulsa from Oklahoma City, yet the economic situations faced by residents in these two cities couldn’t be more different. Those living in the state capital don’t seem to struggle paying down educational debt since their incomes exceed their outstanding loan balance. In Tulsa, however, more than half of late payments are a result of school debt — despite these Sooners earning higher take-home pay than anyone else on this list.
8. Philadelphia, PA
Number of accounts that are late: 3.86%
Median household income: $37,460
Unemployment rate: 6.4%
Sure, it’s home to the Eagles, Benjamin Franklin, cheesesteaks and the 2016 NCAA basketball national champion Villanova Wildcats. But well-paying Lockheed Martin, IBM, GlaxoSmithKline and numerous top-notch medical facilities also reside in the City of Brotherly Love. So why do so many of its residents have difficulty paying their bills on time? High unemployment and a quarter of the population living below the poverty line make citizens struggle to pay down their top two types of debt: education and credit card.
7. Columbia, SC
Number of accounts that are late: 4.09%
Median household income: $48,674
Unemployment rate: 5.1%
Insurance technology and services and tech manufacturing fuel Columbia’s economy, yet residents working for top employers like Westinghouse Electric and Blue Cross Blue Shield still struggle with paying their bills on schedule. Workers at these companies may earn a decent salary, but as with all of the cities on this list, it’s student loan debt that drives Columbia residents to be tardy with their payments.
6. Richmond, VA
Number of accounts that are late: 4.23%
Median household income: $41,331
Unemployment rate: 4.1%
A third of residents earn a college degree and 12.2 percent hold graduate degrees, yet this Virginia city seems to miss out on much of wealth centered in our nation’s capital to its north. As a result, citizens find themselves weighed down by student debt: 67 percent of accounts that are late are education loans, a percentage that’s tied for second highest (with Toledo, OH) in these rankings.
5. Mobile, AL
Number of accounts that are late: 4.26%
Median household income: $43,844
Unemployment rate: 6.7%
In Mobile County, home to Alabama’s third largest city, 32 percent of African Americans and 31 percent of children live below the poverty line. (Overall, a fifth of county residents live in poverty.) With median household income more than $20,000 lower than the national average, residents clearly grapple with paying for necessities, including transportation. Of accounts that are late in Mobile, 13 percent are auto loans — higher than the national average.
4. Milwaukee, WI
Number of accounts that are late: 4.35%
Median household income: $43,385
Unemployment rate: 4.7%
Citizens in this Wisconsin town manage student loan debt better than those living in other cities on this list — only 50 percent of delinquent payments are on education loans. The Cream City has experienced 68 consecutive months of year-over-year job growth, yet a quarter of residents find themselves not paying their utility bills (electric, gas, water) on schedule.
3. Toledo, OH
Number of accounts that are late: 4.44%
Median household income: $33,485
Unemployment rate: 4.6%
Living in just one of many economically stressed Rust Belt cities, 21 percent of Toledo citizens’ accounts are in collections. (Nationally, 17.5 percent of accounts are in chargeoff status.) While the cost of living is cheaper than the national average in Toledo, only 18 percent of residents have a college degree, making it difficult (or even impossible) for many to land jobs at top employers like Owens Corning, Promedica, GM, and Marathon Petroleum — severely limiting earnings potential.
2. Jackson, MS
Number of accounts that are late: 5.10%
Median household income: $44,894
Unemployment rate: 5.4%
Poverty is heavily concentrated in the Southern U.S., but it’s headquartered in Mississippi, the poorest state in the union. Largely rural, many Mississippi residents work in its top industry — agriculture — growing cotton, corn, and rice. Those living in poverty in Jackson, the state’s largest city and the capital, have an even harder time paying their bills on-time than those living in other states because there’s no minimum wage law. So many residents have to attempt to cover all their financial responsibilities making just $7.25 an hour.
1. Detroit, MI
Number of accounts that are late: 5.58%
Median household income: $26,095
Unemployment rate: 6.1%
Thanks to the booming American auto industry, the Motor City prospered for decades. But racial tensions and a reliance on GM, Ford, and Chrysler to drive the economy became Detroit’s downfall. After declaring bankruptcy in 2013, the city and its residents continue to suffer financially — averaging a delinquency rate that’s nearly twice as high as the national average. Unfortunately, high-interest credit-card debt, high unemployment, and extremely low household incomes make it even harder for citizens to get ahead.
Methodology
To formulate our study, we used proprietary data from a subset of Credit Sesame’s 8 million members. The cities listed in the study had a minimum of 350 Credit Sesame members with the highest number of late payments for mortgages, student loans, credit cards, personal loans and auto loans.
Household income data was taken from the U.S. Census Bureau and unemployment rates from the U.S. Bureau of Labor Statistics.
