TranUnion reports that its Credit Risk Index – a sort of “credit score” for various geographical areas which measures the probability that consumers are 90-days delinquent or more – increased 7.1 percent between the first quarter of 2008 and the same quarter this year. The company says this is the largest year-to-year increase in this decade.
When it comes to states with the greatest credit risk, it appears that warm weather may play a negative role in one’s ability to pay bills on time as Mississippi, Texas, Nevada, South Carolina and Louisiana make up the top five riskiest states according to the index.
However, cooler weather may play some part in staying out of delinquency as the index reports that North Dakota, Minnesota, Vermont, South Dakota and Iowa had the lowest delinquency rates in the country.
Chet Wiermanski, global chief scientist at TransUnion, said the company’s index can give a better indication of the level of risk for consumers of a given area.
“While an individual credit score can be quite powerful and accurate in predicting the probability of delinquency for an individual, the average credit score for a specific geography or customer segment does not accurately portray the level of risk existing within that footprint or segment to the same degree as TransUnion’s Credit Risk Index,” he said.
Wiermanski also said the group believes the findings indicate that states like Arizona and Nevada – which saw the highest credit risk percentage increase over the last year – will continue to have problems repaying credit card debt and obtaining new credit.
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