States with the best credit scores

Bill Sikes / AP

By Daniel Bukszpan, cnbc.com

In January 2010, the average credit score in the United States was 692, according to Experian's National Score Index.

Today, it?s between 700 and 710, according to John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring website. In an interview with CNBC.com, he said that reduction of credit-card debt is the main factor behind increased credit scores. ?There?s no doubt,? he said.

If average credit scores are rising because consumers have begun to pay down their credit-card debts, then economic conditions must be improving to some degree. However, this average includes everybody, from the person who just became debt-free to the person who hasn?t made the minimum payment in months.

Just as these people are not all created equal, neither are the states that they call home. As a result, some states will have average credit scores that indicate a rebounding economy, while others will have average credit scores that indicate economic decline.

Mortgage Marvel, a mortgage-shopping website, crunched the numbers from over 330,000 mortgage applications received in 2011 and determined which states had the highest average credit scores.

The results don?t tell the whole story, but they paint a picture of how the states have fared economically, and residents of which states have done the best job of paying their bills.

1. California

Average credit score: 754

The only state on Mortgage Marvel?s list to retain its 2010 standing is California. According to the list, residents of the Golden State have the best credit scores in the country, a status that is unchanged since the previous year.

California?s average credit score is 754, a drop of one point from 2010. However, it still outpaces its nearest competitor, Oregon, by four points.

2. Oregon

Average credit score: 751

Oregon occupied fourth place in 2010. In 2011, it moved up two spots, even though the average credit score went down.

In 2010, the average credit score in Oregon was 751, but it dropped slightly?to 750 in 2011. However, Hawaii and Connecticut both dropped out of their top three 2010 rankings, allowing Oregon to sneak into second place.

3. Wisconsin

Average credit score: 749

The Mortgage Marvel list is made up almost exclusively of states in the Northeast or West. The sole exception is Wisconsin. This Midwestern state rose from its 2010 rank of number five. The average credit score is 749, an increase of two points from 2010.

4. Hawaii

Average credit score: 748

Hawaii is a paradise of beaches, hula dancing and cocktails served in coconut shells. It?s also home to an average credit score of 748.

Hawaii?s 2011 credit score is four points lower than in 2010. This accounts for its drop from the No. 2 spot on Mortgage Marvel?s list.

5. Connecticut

Average credit score: 745

Connecticut stands at a respectable No. 5, a two-notch drop from 2010. The average credit score in the state was 745 in 2011.

The state?s current credit ranking?is the result of a six-point drop from a more impressive score of 751 in 2010. However, it?s still well above the national average.

6. Rhode Island

Average credit score: 745

Rhode Island is the tiny Northeastern state that gave us Elisabeth Hasselbeck, the Farrelly Brothers and Ruth Buzzi. It has an average credit score of 745.

This 2011 credit score is unchanged from 2010. However, due to the reshuffling of other states on the list, Rhode Island?climbed one spot.

7. New Hampshire

Average credit score: 744

New Hampshire?s license plates say ?Live Free or Die,? and accordingly, there?s no sales tax. Still, its residents need to have good credit scores like everyone else, and 2011 saw their average go up from 741 to 744.

In 2010, New Hampshire occupied the No. 9?spot on Mortgage Marvel?s list. The improvement in its average credit score has given it a modest bump to No. 7.

8. Washington

Average credit score: 744

Washington is one of four Western states on this list. Like Maryland, it didn?t make the cut in 2010, ranking at No. 11. However, its average credit score rose from 741 to 744 in 2011, placing it at a respectable 8th place.

9. Massachusetts

Average credit score: 740

Like Maryland, Massachusetts has fared well enough in the last two years to make the list. However, it slipped one notch from its 2010 ranking of number eight. The average credit score in Massachusetts is 740, the same as in Maryland.

10. Maryland

Average credit score: 734

Of all the states in the Mortgage Marvel top 10, Maryland jumped the highest from its 2010 position ??an impressive 12 spots.

While the jump is notable, a closer look shows that it?s not based on a dramatic increase in the state?s average credit score. In 2010, Maryland had a credit score of 734, while in 2011 it rose to 740, an increase of just six points.

This article, "States with the best credit scores," first appeared on CNBC.com.

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