2/20/2012 6:37 PM ET|
Red states' credit beats the blues'
States that voted Republican in the 2008 election are doing better than those that voted Democratic, according to a recent study that uses credit score data as a measure of household financial health.
It's the classic election-year question: Are you better off now than you were four years ago?
As the primary season gets under way, expect to hear some version of that question with increasing frequency. Your answer may depend on where you live -- and how you vote.
A CardRatings.com study used financial data from Experian to identify which states have been the biggest winners and losers over the past four years, and compares those results with how those states voted in the 2008 presidential race -- red or blue.
Using average credit score as a measure of household financial health, red states (those voting Republican in 2008) have generally fared better than blue states (those voting Democratic in 2008) under President Barack Obama. Will that be enough to change votes in 2012? That may depend on whether voters in those states see the glass as half full or half empty.
CardRatings.com found that blue states enjoy higher credit scores, on average, than red states do. At the same time, while credit scores declined in both blue and red states as a group, the average percent decline was smaller in red states, and some red states actually saw credit scores increase.
Here are some highlights of the CardRatings.com study, which provide insights into how household finances in different states have held up under the Obama administration.
Credit scores: Red vs. blue
There are many indicators you can use to gauge economic health, but for general purposes, average credit score is a good catchall barometer. CardRatings.com looked at credit score data from Experian to see how credit scores have changed over the past four years. By compiling this data state by state, and sorting it according to how those states voted in the 2008 presidential election, CardRatings.com was able to break out whose credit scores have done better over the past four years -- households in red states or those in blue states.
The answer? In this tough economic environment, red state credit scores have held up better. On average, credit scores in blue states have declined by 0.58% over the past four years, compared with a 0.19% decline for credit scores in red states.
Despite blue states having a rougher time of it over the past four years, their average credit scores still exceed those in red states, 759 compared with 740. Higher credit scores can make debt burdens easier to bear, as credit cards for good credit tend to have lower interest rates than those for average or poor credit.
Debt levels: Red vs. blue
Speaking of debt burdens, this was another area in which red states have done better than blue states over the past four years. According to Experian, households overall have reduced their debt burdens, but red states have succeeded in reducing theirs by a greater percentage. The average debt burden in red states dropped by 2.54% over the past four years, compared with 2.23% for blue states.
Blue states maintain slightly higher levels of debt overall, with an average household debt of $24,349, compared with $24,181 for red states.
Top 10 states that are better off
The nation's economic difficulties have had varying impacts in different parts of the country. In 10 states, average credit scores have actually improved over the past four years:
|State||2008 vote||4-year percent change in credit score|
In keeping with the theme of Republicans doing better than Democrats under Obama, note that six of the 10 states in which credit scores improved voted for Arizona Sen. John McCain in 2008.
Improving credit scores can be part of a beneficial cycle for households. Credit card offers for people with good credit are likely to feature lower interest rates, which in turn makes debt more manageable.
Top 10 states that declined the most
At the other end of the spectrum, here are the states whose average credit scores have declined the most under Obama:
|State||2008 vote||4-year percent change in credit score|
|District of Columbia||Democrat||-1.02%|
Eight of the above states voted for Obama last time around. Their economic malaise could certainly hurt the sitting president's bid for re-election.
Weakening credit scores can make a bad financial situation worse. Credit cards for bad credit are likely to have higher interest rates. These higher borrowing costs make debt more difficult to manage.
So are you better off than you were four years ago? Ironically, you have a better chance of answering "yes" if you live in a red state. Will this affect your vote in 2012?
Note: Experian tracks data by metropolitan area, so CardRatings.com averaged these figures within each state to calculate statewide numbers. Figures were available for metro areas within 44 of 50 states, plus the District of Columbia. The most recent Experian credit ratings and debt figures from 2011 were used, and they were compared with Experian's data from four years earlier.
More from CardRatings.com:
VIDEO ON MSN MONEY
With all due respect to each previous comment. Our government is made up of two parties and the independents. None of whom are actually working together for the common good of the American people. Congress enacts laws they don't have to obey. They have their own retirement plan and healthcare and pass their own salary increases. How many terms do you have to serve before you get you get a pension in our government? My take on the survey is that the rich are getting richer and the poor are getting poorer. Unfortunately that is the way it is in this country. I keep hearing about Social Security and Medicare being entitlements. An entitlement to me is something you get for nothing. I and my employers have been paying into Social Security and Medicare for several decades so I don't see this as me getting something for nothing. It is a return on my investment. Suppose congress had to loot their own pension plan as they did the Social Security trust funds to pay for government programs. But I digress. Red State/Blue State - This is the United States so lets stop talking about how we are divided and start talking about how we can be "UNITED" once again.
That's a FAR better way to compare states than to average the citizens' credit scores.
The problems we face today are
there because the people who work
for a living are outnumbered by those
who vote for a living.
Hey Bob, You're conveniently forgetting the phony wealth created by the stock bubble that burst in March of 2000. Are you saying Clinton was responsible for that too? He also was lucky enough to escape 9/11 from happening under his watch, even though he had an opportunity to take Bin Laden out and didn't pull the trigger.
Bush made his share of mistakes, but your view is overly simplistic, partisan and inaccurate.
The reason we have less jobs is due to
a) too many people competing for a job
c) the US businesses who take the jobs to t poor nations
We cannot compete with people who are willing to work for $1 a day,
We cannot compete with robots, and computers who replace us!
We cannot compete with nations that subsidize their products
We cannot compete with nations who manipulate their currencies, so their products are artificially cheap.
We cannot compete with nations who pollute the world, and yet we purchase their cheap products, which in the long run destroys the whole world's environment and in doing so, we take all life with it.
What good is it if a person gains the whole world, but in doing so, destroys the very life the world provides him?
Come on. Aren't we all divided enough without trying to concoct baloney comparisons like this?
I want to know who decided that credit score has anything to do with economic health? You can have a bad credit score and still be as rich as can be--if you dont have credit cards or credit debt. For example, if you buy your house outright--it doesnt go on your credit rating. If you don't have credit cards--that's a negative. If you buy your car outright, again this doesnt go on your credit rating. Clearly, all credit scores are really good for is showing how much debt you have and how you pay it back.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
RECENT ARTICLES ON CREDIT SCORES
Even those who don't like to shop are probably hitting the stores this month. Here's what to be on the lookout for and here's what to avoid.