A ranking of the states by credit conditions pins North Dakota at the top of the list and Nevada at the bottom, with factors such as unemployment and the housing market impacting local residents' credit scores. As lenders nationwide continue to evaluate credit risk in an uneven market, the ability to leverage sophisticated risk management software to make such evaluations could prove crucial.
CardRatings.com conducted a nationwide credit risk analysis and found that a handful of states continue to labor under the pressure of a sagging jobs market and high foreclosures. The website ranked each state by five categories – unemployment, personal bankruptcy, average credit score, credit card delinquency and home foreclosure rates.
Nevada ranked as the country's worst state for credit conditions, plagued by a nation-high 12 percent unemployment rate – as reported by the Department of Labor – and high rates of foreclosure and bankruptcy.
On the other end of the spectrum was North Dakota, which is considered CardRatings.com's best state for credit conditions. North Dakota ranked as best in the nation in three of the five categories: unemployment, foreclosures and average credit scores.
"It's very interesting to look at credit conditions at a state level. I think states in the lower credit tier could learn quite a bit from what states in the upper tier are doing right," said CardRatings.com founder Curtis Arnold.
While the lending climate in Nevada may seem less amenable than that of North Dakota, lenders in either state might yet uncover new financial opportunities by implementing a risk management framework that centralizes data to encourage better decision making. Having a central source of customer data may help bankers in credit-tight Nevada evaluate and market to local consumers.
