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Average Credit Score & Debt in Minnesota

The average Vantage Score in Minnesota is 720. The “Land of 10,000 Lakes” is a huge state, but more than half of its residents live in just two cities, Minneapolis and St. Paul. These two cities, which are literally right next to each other—it’s only a 17-minute drive from the center of Minneapolis to the center of St. Paul—constitute the center of business, transportation, and industry for the state. 

Despite notoriously harsh winters, Minnesota boasts one of the highest standards of living in the country. Approximately 33 percent of the state’s residents have at least a bachelor's degree, the median household income is above $60,000, and only 11 percent live at or below the poverty level. [1] America's Most (and Least) Educated States https://247wallst.com/special-report/2014/09/23/americas-most-and-least-educated-states/2/

Despite these glowing statistics, Minnesota’s relationship with debt and credit is a complicated one. Minnesota’s above-average credit score belies other issues that make that statistic a bit deceptive. This article will take a closer look at Minnesota’s relationship with debt.

Key Statistics

Contents

Minnesota’s Credit Score Over Time

Year Average Vantage Score - MN
2015 704
2016 752
2017 677
2018 713
2019 715
2020 720

Minnesota’s credit score is consistently above the national average, and is also the highest in the nation. [2] Minnesota residents have the highest average credit score—here’s how other states compare https://www.cnbc.com/select/average-credit-score-by-state/ This has been true every year since 2015, with one notable exception. In 2017, Minnesota’s average Vantage Score dipped below 700 to 677, just one point below the national average of 678, but then went immediately back up again the following year. Since 2018, the state has continued this trend. While the reasons for this aren’t exactly clear, one economic indicator that coincides with this dip is slower than average economic growth for the state from 2016 to 2017. [17] The bad news is Minnesota’s economy grew more slowly than the U.S. last year. That might also be the good news https://www.minnpost.com/economy/2018/07/bad-news-minnesota-s-economy-grew-more-slowly-us-last-year-might-also-be-good-news/

How Credit Scores in Minnesota Compare to Other States

Year Average Vantage Score - MN Average Vantage Score - US
2015 704 672
2016 752 726
2017 677 678
2018 713 682
2019 715 684
2020 720 690

Minnesota’s Vantage Score has been consistently the highest in the country. While many states have a credit score above 700, none have gotten higher than 712. Minnesota’s Vantage Score is a full 8 points higher at 720. All of the states with a score above 700 fall into three geographical regions:  Midwestern (Iowa - 707, Nebraska - 707, North Dakota - 709, Wisconsin - 711), New England (Vermont - 712, New Hampshire - 711, Massachusetts - 710, Connecticut - 700), and Western states (Washington - 710, Oregon - 705, Montana - 704, Idaho - 700, and Utah - 700).

Debt in Minnesota

Year Average Household Debt - MN Average Household Debt - US
2003 39,800 33,430
2004 44,220 37,290
2005 48,160 40,650
2006 52,030 45,410
2007 55,200 50,170
2008 55,930 52,010
2009 53,660 49,820
2010 50,840 47,410
2011 52,110 47,790
2012 51,310 47,020
2013 50,470 45,310
2014 50,660 45,710
2015 51,110 46,000
2016 51,850 46,950
2017 53,260 48,800
2018 54,190 50,090
2019 55,380 51,580

Household debt in Minnesota is consistently above the national average. As of 2019, Minnesota ranked 14th in average total household debt at $55,380 per household. Minnesota’s debt-to-income ratio is also around the middle of the pack at 1.41.

So how can a state bear consistently above-average debt, but maintain such a favorable credit score? While the level of debt in Minnesota remains above the average, the gap seems to be narrowing. In 2003, the difference between household debt in Minnesota and the national average was more than $6,000. In 2007, just before the recession, the difference was just over $5,000. In 2019, the difference is less than $4,000.

So what is the difference between pre-recession and post-recession Minnesota? Credit utilization offers a clue. [4] Experian 2020 Consumer Credit Review https://www.experian.com/blogs/ask-experian/consumer-credit-review/ Minnesotans seem to deal with hard economic times by tightening the belt a bit and paying down debt, which improves credit scores. The gap between Minnesota’s household debt and the national average was never narrower than during the recession that began in 2008. This also holds true during the current COVID-19 pandemic. 2020 was certainly a year of economic uncertainty which led to Americans spending less and making more on-time payments. [3] Amid COVID-19, Minnesota Residents Again Have Highest Average Credit Score https://www.usnews.com/news/best-states/articles/2021-01-07/minnesota-residents-again-have-highest-average-credit-score

Mortgage Debt

Year Average Mortgage Debt - MN Average Mortgage Debt - US
2003 29,530 23,740
2004 32,750 26,590
2005 35,710 29,230
2006 39,250 33,400
2007 41,880 37,250
2008 42,360 38,490
2009 40,650 36,810
2010 38,420 35,010
2011 38,100 34,200
2012 37,190 33,230
2013 36,250 31,630
2014 35,870 31,520
2015 35,900 31,330
2016 36,040 31,590
2017 36,950 32,940
2018 37,460 33,680
2019 38,510 34,790

One area that reveals a problem the state has been dealing with since before the recession is mortgage debt. You can see from the trend lines that while mortgage debt is higher than the national average, the trend follows the nation very closely. Besides having a higher-than-average level of debt, the state’s level of delinquencies of 60 days or more nearly tripled between the summer of 2019 and the summer of 2020, due to the COVID-19 pandemic. [5] Federal Reserve Bank of Minneapolis - Ninth District mortgage conditions stabilize over summer https://www.minneapolisfed.org/article/2020/ninth-district-mortgage-conditions-stabilize-over-summer The good news for many of these homeowners is that because the CARES Act and the Pandemic Unemployment Compensation program instituted the possibility of mortgage forebearances, the delinquency rate has at least stabilized. [6] Federal Reserve Bank of Minneapolis - Large income losses loom for many workers when Pandemic Unemployment Compensation expires https://www.minneapolisfed.org/article/2020/large-income-losses-loom-for-many-workers-when-pandemic-unemployment-compensation-expires

One of the major contributors to Minnesota’s high mortgage debt is above-average housing costs. While Minnesota’s total cost of living is below the national average, the state’s housing prices are almost 2 percent above the national average. The median cost of a home in Minnesota is $235,600, while the national average is $231,200. [8] Cost of Living in Minnesota https://www.bestplaces.net/cost_of_living/state/minnesota Housing prices have increased 4.8 percent from 2019 to 2020, rising for the eighth year in a row. [9] Minnesota home prices continue to go up despite pandemic https://www.kare11.com/article/news/investigations/minnesota-home-prices-continue-to-go-up-despite-pandemic/89-c3400997-061e-4fe9-bbb0-e6ac7b427fe4

Credit Card Debt

Year Average Credit Card Debt - MN Average Credit Card Debt - US
2003 2,800 2,960
2004 2,990 3,040
2005 3,200 3,060
2006 3,290 3,170
2007 3,610 3,490
2008 3,750 3,670
2009 3,500 3,370
2010 3,190 3,050
2011 3,090 2,950
2012 2,960 2,850
2013 2,870 2,710
2014 2,930 2,730
2015 2,970 2,800
2016 3,080 2,930
2017 3,200 3,100
2018 3,290 3,220
2019 3,380 3,390

Of all the indicators of Minnesota’s above-average credit score, the way Minnesotans handle credit cards contributes the most to that score. Like household and mortgage debt, Minnesota’s average amount of credit card debt is above the national average, but not by much. Between 2018 and 2019, it narrowed the gap to within $10.

One thing that certainly helps Minnesotans keep debt under control is a cost of living that is 2.5 percent below the national average. [7] Credit Card Debt In Minnesota: Average Score, Balance, More https://patch.com/minnesota/eagan/credit-card-debt-minnesota-average-score-balance-more Minnesota’s average costs for groceries, healthcare, utilities and transportation are all under the national average. [8] Cost of Living in Minnesota https://www.bestplaces.net/cost_of_living/state/minnesota Having more disposable income available means a reduction in late payments, which directly contributes to a good credit score. 

Auto Loan Debt

Year Average Auto Loan Debt - MN Average Auto Loan Debt - US
2003 2,580 2,960
2004 2,560 3,040
2005 2,670 3,240
2006 2,650 3,360
2007 2,620 3,360
2008 2,540 3,310
2009 2,290 3,030
2010 2,250 2,950
2011 2,500 3,050
2012 2,700 3,270
2013 2,990 3,420
2014 3,260 3,720
2015 3,550 4,070
2016 3,690 4,340
2017 3,950 4,520
2018 4,130 4,700
2019 4,220 4,850

Auto loan debt in Minnesota has been significantly below the national average for years. The biggest factor contributing to this trend is the low cost to own an automobile. The average cost of gasoline, car insurance and maintenance expenses is about 96 percent of the national average. [8] Cost of Living in Minnesota https://www.bestplaces.net/cost_of_living/state/minnesota

Minnesotans also have a low delinquency rate for auto loans. Nationally, the delinquency rate for auto and retail loans is 4 percent. Minnesota’s is 2 percent. [15] What regions have more delinquent auto loan debt? https://www.urban.org/urban-wire/what-regions-have-more-delinquent-auto-loan-debt Minnesota is tied for this distinction with 11 other states (Maine, Massachusetts, Montana, Nebraska, New Hampshire, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming). Many of these states also boast a credit score higher than 700, along with Minnesota.

Student Loan Debt

Year Average Student Loan Debt - MN Average Student Loan Debt - US
2003 1,430 1,060
2004 1,840 1,440
2005 2,080 1,610
2006 2,450 1,970
2007 2,900 2,250
2008 3,330 2,670
2009 3,730 3,010
2010 4,200 3,370
2011 4,600 3,620
2012 5,020 4,000
2013 5,310 4,250
2014 5,550 4,490
2015 5,730 4,660
2016 5,980 4,920
2017 6,100 5,130
2018 6,280 5,390
2019 6,310 5,510

Student loan debt is a growing problem for Minnesota. The state is consistently above the national average for student loan debt, and the gap between Minnesota and the rest of the country is widening. About two-thirds of undergrads take out student loans to pay for school. [10] How bad is Minnesota’s student-debt situation? https://www.minnpost.com/education/2019/05/how-bad-is-minnesotas-student-debt-situation/ Minnesota ranks fifth in the nation for student loan debt, with each student carrying an average of more than $32,000 in debt. Minnesota’s average debt per borrower has increased over 31 percent in a ten year period (2007-2017). [11] Minnesota ranks high for student loan debt https://www.bizjournals.com/twincities/news/2019/05/06/minnesota-ranks-fifth-nationally-for-student-loan.html

Part of the reason for the high debt numbers is that Minnesota’s private colleges are in a recruitment war, investing ever-increasing sums of money in equipment and amenities in an attempt to attract students. The cost of that investment is passed onto students in the form of higher tuition. A study conducted by LendEDU.com found that over a ten-year period, nine of the top ten schools whose students carried the largest amount of debt were private colleges. [12] How Student Loan Debt Has Changed Over the Past Decade: By School and State https://lendedu.com/blog/student-loan-debt-decade-comparison/ The students’ total debt ranged from $33,873 to $41,133 per student.

Minnesota still grapples with the same issues surrounding the costs of higher education as the rest of the country. The cost to attend college still outpaces inflation, and rises faster than household income. In Minnesota, private colleges outnumber public universities so lower-cost options are limited. Colleges in Minnesota are exploring creative ways to defray high education costs, such as issuing bond initiatives to fund construction and in some cases, selling off or merging individual schools with other institutions to share costs or generate revenue. [13] The big problem facing Twin Cities’ small colleges https://www.bizjournals.com/twincities/news/2017/02/10/the-big-problem-facing-twin-cities-small-colleges.html

Sources

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