Having a good credit rating is the key to unlocking the lowest interest rates available on loans, the best credit cards with rewards, and even the next apartment you covet.
Many factors play a role in achieving a strong credit score, and while where you live won’t magically boost it, some cities stand out by providing their residents with better opportunities for credit. improve their finances, which, in turn, can help improve their credit. For example, a big part of building good credit is being able to pay off debt, which is easier to do in cities with lower unemployment rates and higher minimum wages than in other cities. .
A recent study by researchers from Enhanced Points™ looked at 60 of the largest cities in the United States, analyzed eight different factors – average credit scores, credit card debt, interest rates, cost of living, unemployment rate, minimum wage, personal income and number of financial advisors available – and used this information to reveal the best US cities to build your credit score.
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The 10 Best Cities to Build Your Credit Score
The study determined that the following 10 US cities were the best for building your credit score:
- Boston, MA
- San Jose, California
- Rochester, NY
- Albany, NY
- San Francisco, California
- Minneapolis, Minnesota
- Salt Lake City, UT
- Syracuse, NY
- Madison, Wis.
- San Diego, California
Boston, San Jose, and Rochester took first, second, and third place respectively as the best cities to boost your credit score. The minimum wage is higher in each of these cities, with Boston having an average minimum wage of $14.25 per hour, one of the highest in the United States. The relatively low unemployment rate of 3.7% also helped Boston earn the top spot, as did having interest rates of 3.81%, the lowest of any city analyzed.
In addition to a higher minimum wage, other commonalities of the top three cities include lower unemployment rates, lower cost of living, higher average credit scores, and an abundance of financial advisors.
Of the top 10 cities, Salt Lake City has the lowest cost of living index, while the three New York cities that made the list – Rochester, Albany, and Syracuse – reveal an average cost of living index. life which is 30% cheaper to live than the national average.
When it comes to the number of financial advisors available, Boston has 121 per capita, while some of the places on the list of worst cities for building credit, which we’ll get to next, have far fewer resources for their residents – Austin , for example, only has 70 available counselors per capita, while New Orleans and Oklahoma City each have 30 available counselors per capita.
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To obtain the ranking, each factor was assigned a certain numerical amount based on its relative importance in improving one’s credit score, which was then converted to a number between 0 and 5, calculated (click here to learn more about their methodology) and ranked accordingly to determine which cities are most conducive to improving its finances and, ultimately, its credit rating.
The worst cities to build your credit score
The study determined that the following 10 US cities were the worst places to build your credit score:
- Houston, TX
- El Paso, TX
- Dallas, TX
- New Orleans, LA
- San Antonio, TX
- Memphis, TN
- Austin, TX
- Atlanta, Georgia
- Oklahoma City, OK
- Nashville, TN
An obvious observation here is the prevalence of Texas cities appearing on the list – in fact, they make up half of the list.
Despite a low cost of living, Texas residents have a lot going for them — an average credit score of 674 (one of the lowest in the nation), the highest average credit card debt in the nation ( to $5,308) and a minimum wage of just $7.25. per hour, one of the lowest in the United States In Houston in particular, which ranks first as the worst city to build your credit score, the unemployment rate is currently 5.3%, down from 3.7 % in Boston.
In the worst 10 cities, the average credit score sits at 675, significantly lower than the average credit score in the top 10 cities, which is 713. In contrast, as the top best city overall, Boston has a high average. credit score of 720.
At the end of the line
While where you live will not directly send your credit score skyrockets, every major US city offers certain external variables such as minimum wage, unemployment rate, and cost of living, among others. These factors can end up playing a role in helping you build your finances, which, in turn, can help you establish and manage your credit score.
The study really emphasizes this idea, showing that it’s easier to improve your credit score when the city you live in offers greater financial opportunities to its residents.
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*Results may vary. Some may not see an improvement in scores or approval ratings. Not all lenders use Experian credit reports, and not all lenders use scores impacted by Experian Boost.
Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.