Minnesota Has the Highest Credit Scores in the U.S.

The national average FICO credit score reached new heights last year, but the official title for highest state average score goes to Minnesota. 

According to Experian’s latest data, the Land of 10,000 Lakes has clinched the number one spot for the ninth time in a row, with an average 742 score. That’s up four points from 2020, despite the pandemic.

Thanks to this latest gain, the state has officially entered FICO’s “very good” rating. With a score like this, the average borrower may find it easier to qualify for a variety of in-person or online loans in MN.

But does everyone in the state have it that easy? Keep scrolling to find out more about how FICO generates these scores and the people who might fall below average. 

How Do You Earn a Very Good Rating?

Five common factors affect your FICO score:

1. Payment History:Never missing a due date will help you pack your report with good instances of credit. On the flip side, keeping delinquencies and other negative payment entries off your record will also protect your score.
2. Credit Utilization:When it comes to credit cards and lines of credit, how much of their overall limit you use comes into effect. Keeping your balances below 10% can maintain a higher score.
3. Account History: FICO rewards a lengthy history of old and new accounts, as this guarantees they can collect a good cross-section of your payment history and utilization over years. 
4. Account Variety: FICO also likes to see how you handle different accounts, from installment loans and lines of credit to mortgages, auto loans, and more. 
5. Recent Activity: Opening or closing accounts will affect your score briefly.

FICO collects data from the above five categories to generate your score. If you manage to ace each factor, there’s a good chance you’ll earn something like 742 or higher.

What if You’re Below Average in Minnesota?

Despite the state’s ninth straight row at the top, not everyone who calls Minnesota home will have a “very good” score. A new report reveals plenty of Minnesotan families are struggling with their finances right now:

• The average family carries more than $6,000 in credit card debt
• 45% of Minnesotans carry over a balance on these accounts
• 61% don’t have enough savings to cover an unexpected expense of $1,000

These eye-opening stats could spell trouble for the state’s average. If you recall FICO’s utilization factor, carrying over a balance on credit could bring down even the best scores. 

Handling an unexpected $1,000 expenses can be challenging if you already carry a balance. You may not have room on an existing line of credit to cover an emergency, so you may have to apply for short term personal loans at a time when your score might not be at its best. 

While short term personal loans are available for people with low scores, you could be spending more on rates and fees to do so. 

In Minnesota, Being Average Pays Off

If your score falls below the state average, look back at FICO’s five categories to see what you can do to add more positive entries to your report. While improving your score may simply require time as the bad marks expire, paying bills on time and paying off balances can help you pack more good stuff into your file. Eventually, you’ll find it easier to borrow money in an emergency.