In a financial shift that’s raising alarms, credit scores have taken a dip in every U.S. state over the past year. Experts are linking this trend to increasing debt, missed payments, and rising credit card balances as Americans grapple with inflation and the rising cost of living.
Credit Scores Drop Nationwide
Between the third quarter of 2023 and the same period in 2024, no state was spared from a decline in average credit scores. Financial analysts say that as household expenses climb, many families are turning to credit cards to cover day-to-day costs, which is contributing to mounting debt and late payments.
The issue isn’t isolated to any one demographic—middle-income families and even those previously considered financially stable are now showing signs of strain. “When credit utilization spikes and payments start slipping, it’s a recipe for lower credit scores,” said a leading financial expert.
Which States Are Hit Hardest?
While all 50 states experienced declines, some regions were hit harder than others. Alaska leads the pack with the most severe drop, seeing its average credit score fall by 1.02%. This steep decline is largely due to high credit card debt per person and elevated credit utilization rates.
Close behind are Vermont and Mississippi, with declines of 0.85% and 0.79%, respectively. Mississippi’s ongoing economic challenges and high rates of defaulted debts have made it particularly vulnerable to the downturn.
In contrast, states like Maine, Oregon, and Kentucky were more resilient, showing the smallest declines of around 0.15%. These states credit their relative stability to higher financial literacy and fewer delinquent accounts.
What Falling Credit Scores Mean for Americans
A drop in credit scores isn’t just a number—it comes with real consequences. People with lower scores often face higher interest rates on loans and credit cards, making it more expensive to borrow money. They may also struggle to get approved for mortgages, car loans, and even rental applications. In some cases, employers check credit scores as part of their hiring process, meaning poor credit could even affect job prospects.
How You Can Protect or Improve Your Credit
Financial experts recommend taking proactive steps to limit the damage:
- Pay Down Debt: Focus on paying off high-interest credit cards first. Reducing your balance will help lower your credit utilization rate, which is a major factor in your score.
- Make Timely Payments: Even one missed payment can hurt your score. Set up reminders or automatic payments to ensure you don’t fall behind.
- Avoid Opening New Credit Lines: Applying for multiple new credit accounts in a short period can negatively affect your score.
By taking action now, you can avoid further damage and start rebuilding your credit health. Experts emphasize that recovery is possible, but it requires consistency and planning.
