Comparison of states with the highest and lowest personal debt and income levels
Collectively, Americans owe more than $15.3 trillion in personal debt, accumulated by financing homes and cars, taking out loans to attend college, or simply using credit cards. However, debt is not necessarily a sign that borrowers are living beyond their means or buying irresponsibly. It is often used as a tool to achieve financial goals that can have long-term benefits, such as buying a home to build equity over many years. The debt and income profiles of each state vary significantly when factors such as home prices, cost of living, and economic opportunity are considered.
While not a factor in credit scores, lenders consider an applicant’s balance of debt and personal income when deciding to approve credit applications and setting account terms, such as interest rates. The more of your income is used to pay off debt, the more difficult it will be to get approved.
experience compared data from its consumer credit database with Bureau of Economic Analysis (BEA) statistics to calculate the states with the highest and lowest personal debt-to-income ratios. Median personal income figures come from BEA, while personal debt balances are derived from Experian’s consumer credit database as of the third quarter (Q3) of 2021. Additionally, trends in homeownership, student loan debt, auto and payday loans, credit card usage, and wages are used to contextualize each state’s debt profile.
However, there are many factors at play when analyzing debt profiles and not all of them can be included in this analysis. For example, him…