Experian, one of the 3 main credit reporting agencies, recently released some data showing that Minnesotans have the highest overall credit scores. As you can see from the map below, the Midwest does great, and Minnesota is number 1.
Why is a bankruptcy lawyer writing about geographic distribution of credit scores? Because he wants to show you that even people who file bankruptcy often have good credit scores. According to the Minnesota Bankruptcy Court, 3343 people have filed bankruptcy through the end of April, 2019 in Minnesota. There were only 82 business days during that time, so that means about 4o people per business day filed bankruptcy so far. That’s quite a few people isn’t it?
My clients often see a 720 credit score in only 2 years after bankruptcy. This is because Walker & Walker takes special care to show people how to build credit after bankruptcy. We help them sign up for the right kind of credit card afterwards, and help them reaffirm good debt, like first mortgages.
We also help our clients sign up for income-based repayment so that their student loans improve credit score instead of harming it. When you are on income-based repayment, it is common to have a student loan payment that is less than $50/month. Even though this amount is small, the student loans will continue to tell the credit reports that the loan is in good standing and the payments are current.
WHAT MAKES MINNESOTA SPECIAL?
According to the Star Tribune, Minnesotans have good credit scores because they have a low utilization rate. Utilization rate is one of the components of credit score and it measures how close to the spending limit people are on their credit cards. Assuming you have the money for it, you can keep your utilization low by paying your credit cards completely every month and by avoiding charging too much on them. You can also make early payments online so that the balance on the card never gets very high at all,
I think that the reason Minnesotans have such high credit scores is that the cost of living compared to median income in Minnesota is very favorable. As you can see from this article, Minnesotans make as much money as people in more expensive states, but they have lower expenses.