The FICO scores of credit card users in the South were lower than anywhere else in the nation, researchers found when reviewing more than 200 million credit cards.
A deeper look into these numbers revealed something surprising. The South’s lower credit scores didn’t fall along racial lines. The region’s predominantly Black communities had similar scores to the areas with the fewest Black residents. And they couldn’t be explained by poverty either – even big wealthy cities like Atlanta and Dallas had comparable scores to the poorer, rural South.
“The South is a huge region, it's the most populous region in the country. And there are a lot of very different states there. Try and compare Texas to North Carolina or West Virginia. It's just this huge spectrum of race, economics, culture, anything you can think of — all united by one thing: low credit scores,” says Andrew Van Dam, data columnist at the Washington Post.
It turns out that the scores are driven by medical debt and lack of health insurance.
“Of the 100 counties in the country with the highest medical debt, something like 88 of them are in the South, it might be higher than that. And the remaining ones are all in neighboring Missouri and Oklahoma, which are in some ways culturally southern as well,” he says.
Van Dam also points out: “The credit industry is very aware of this issue. … Very slowly and hopefully surely … credit agencies are starting to reduce the role that medical debt plays on your credit scores. So regardless of the political situation in the South, there is a chance that at least their credit scores down there … will improve slightly because some medical debts are going to start coming off of our credit reports.”