State consumer credit scores near bottom

Jeanette A. Tucker  |  3/4/2008 9:32:42 PM

News You Can Use Distributed 02/15/08

Louisiana consumers have an average credit score of 672. At 20 points below the national average of 692, Louisiana ranks near the bottom nationally, with 48 states having higher average credit scores, according to the Experian National Score Index.

“The credit score index monitors several components of consumer credit behavior,” explains LSU AgCenter family economist Dr. Jeanette Tucker. “It provides insight into consumer credit trends.” Experian is a global information services company that organizations and consumers consult for help with commercial and financial decisions.

The score index covers debt, credit usage, minimum monthly payments, open credit cards, late payments and credit inquiries. The Experian Study also reveals that 48 states have higher average credit scores than Louisiana.

“This higher credit risk score is a powerful indicator of Louisiana’s overall consumer financial health,” Tucker said. Consumers with higher credit scores consistently have fewer late payments and past-due accounts, fewer accounts in collection, repossession, foreclosure and lower overall percentage of debt to income. “These are all good indicators of responsible credit behavior,” Tucker said.

Credit scoring is used to help potential lenders quickly measure an applicant’s credit worthiness. The score is based on the information found in the individual’s credit report and calculated using a statistical formula. The scoring system awards or deducts points for each factor that helps predict payment behavior. The sum of these points gives a consumer a credit score.

Lenders review credit scores along with the additional applicant information to decide whether they want to extend credit to borrowers who represent a particular level of risk. Typically, credit scores range from 330 to 830. A higher credit score suggests a lower credit risk. Individuals with higher credit scores are generally offered more favorable loan rates and terms.

Using data available from Experian, the LSU AgCenter surveyed parish-specific credit scores. Average credit scores ranged from a high of 682 in the Lafayette area, to a low of 662 in the Alexandria area, reflecting the overall state average score of 672. Scores for each parish and region may be found by going to the LSU AgCenter Web site at www.lsuagcenter.com and entering “parish credit scores” in the search box, or (download a print version at this link.)

The moral of this story? Tucker says it is important to note that every consumer is different, and each one faces his or her unique set of circumstances. Each should take ownership of his or her own financial future by exercising responsible behavior, to learn and practice the skills necessary to keep credit score in the ranks of the upper echelon.

To improve your credit score, Tucker advises paying your bills on time, paying down outstanding balances, keeping balances low on credit cards and other revolving credit products and applying for and opening new accounts only as needed.

The Experian National Score Index is available online at: www.nationalscoreindex.com

For related family economics and consumer topics, click on the Family and Home link on the LSU AgCenter homepage at www.lsuagcenter.com. For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.

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On the Internet: LSU AgCenter: www.lsuagcenter.com.
On the Internet: Experian: www.nationalscoreindex.com.
Contact: Jeanette Tucker (225) 578-5398 or Jtucker@agcenter.lsu.edu.
Editor: Mark Claesgens (225) 578-2939 or mclaesgens@agcenter.lsu.edu.

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