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Where Americans Are Taking Control of Finances

Many Americans strive every year to get their finances in order. That could mean working to get out of debt, making sure their credit card bills are paid on time or making additional student loan payments. Residents in some places across America are doing a better job at taking control of finances than other places. Read on as we delve into the data to examine these places.

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In order to find the places where people are taking control of finances, SmartAsset looked at data showing how certain personal finance metrics have changed from 2010 to 2016. We looked at percent change in credit scores, credit card debt, credit utilization ratio, late credit card payment rate, non-mortgage debt and mortgage delinquency rate. Check out our data and methodology section below to see where we got our data and how we put it together to create our final rankings.

Key Findings

  • California leads the way  Ten metro areas in our top 15 places where residents are taking control of finances are in the Golden State. California metro areas improved in a variety of ways, but many saw steep declines in average non-mortgage debt.
  • Finances are (generally) improving – We found that on average credit scores are rising, while credit card debt and late credit card payment rates are decreasing. Two metrics however, average credit utilization ratio and average non-mortgage debt, are up.
  • Lousy Louisiana Five of the metro areas that ranked the lowest in our study are in the Bayou State: Lafayette, Lake Charles, Shreveport, Alexandria and Baton Rouge.  Some personal finance metrics coming out of Louisiana show that residents are doing worse than they were in 2010. In particular, average non-mortgage debt is up around 15% – 20% in the Louisiana metro areas that ranked in the bottom 15.

Places Where People Are Taking Control of Their Finances

1. Los Angeles, California

Angelenos’ financial future looks brighter in 2016 than it did in 2010. For starters, on average, their credit scores are about 2.1% higher. A higher credit score means Angelenos now have better access to financial tools like low mortgage rates and the best rewards credit cards.

In terms of paying off their debt, average residents of Los Angeles are doing a better job in 2016 than they were in 2010. The late payment rate on credit card bills dropped by 0.25 and the percent of mortgages which were delinquent dropped 6.6 percentage points. For both of those metrics Los Angeles ranks in the top 15.

2. Las Vegas, Nevada

One of the biggest personal finance sins you can commit is missing credit card payments. For one, it puts a black mark on your credit report, lowering your credit score. Secondly, credit card debt, with its high APRs, is expensive to hold. So, by avoiding paying you’re causing yourself more pain down the road. Las Vegas ranked so well in this study because, on average, residents greatly improved on their late credit card payments. According to our data, Vegas residents went from an average late payment rate of 0.81 in 2010 to an average late payment rate of about 0.50 in 2016. This was the second-largest drop in late payment rate for any metro area we studied.

Other metrics improved as well. Las Vegas scored in the top 5 for percent increase in credit scores, percent decrease in credit card debt and percentage point drop in mortgage delinquency rate.

3. Riverside-San Bernardino, California

In 2010, many residents in Riverside-San Bernardino struggled with paying their credit card bills on time. According to data from Experian, this metro area had a late payment rate of 0.97, meaning the average resident made almost one late payment per billing cycle. That number dropped all the way down to 0.45, meaning a drop of 0.52 points. That is the largest drop in late payment rate in our study.

Thanks in part to paying their bills on time, residents also saw average credit scores rise. Credit scores in Riverside-San Bernardino rose just under 2% on average. With higher credit scores residents are more likely to be approved for the best 0% APR credit cards, which would help lower the interest on their credit card debt.

4. Sacramento-Stockton-Modesto, California

The Sacramento-Stockton-Modesto metro area secured the fourth spot in our rankings thanks to top 10 scores in five out of the six metrics. This metro area’s most impressive score came in percentage point change in mortgage delinquency rate. From 2010 to 2016 the area’s mortgage delinquency rate dropped from 35.6% to 27.9%.

Residents are also carrying less credit card debt on average. In 2010 the average resident here had about $6,100 in credit card debt. By 2016 that number had fallen to about $5,200. That’s a drop of 14.5%, the sixth-highest in our study.

5. Bend, Oregon

Bend is the only Oregon representative on our top 10. This metro area in central Oregon claimed the fifth spot in our ranking due to residents’ sharply decreasing average credit card debt, credit utilization ratio and mortgage delinquency rate. In each of those metrics Bend scored in the top six.

Bend’s best score came in percent change in average credit card debt. The average resident went from holding over $6,400 in credit card debt in 2010 to just over $5,200 in 2016. This represents a percent decrease of just under 19%, the third-most in our study. Of course, $5,200 may still be too much credit card debt to be holding. Remember, the most responsible way to use your credit cards is to pay off your whole balance each month.

6. Phoenix, Arizona

In 2010 the average Phoenix resident had a credit score around 650. While this isn’t a terrible credit score (it puts them in the “fair” credit score range), there was room for improvement. And Phoenix residents rose to the task. From 2010 to 2016 the average credit score went from 651 to 665. That’s a percent increase of just over 2%, the fourth-highest in our study.

7. Monterrey-Salinas, California

Another California metro area takes seventh. Monterrey-Salinas residents are taking control of finances by working to get out of debt. According to our data, Monterrey-Salinas residents lowered their average non-mortgage debt from $48,446 to just over $40,000. That’s a percent decrease of 17.2%, the largest drop in our study.

Other metrics improved, as well. Take the credit utilization ratio. The average utilization ratio for residents dropped just under three percentage points. In fact, the average resident here now uses less than 30% of their credit limit. In general, it’s recommended that you have a utilization ratio under 30%.

8. Miami-Ft. Lauderdale, Florida

Residents in the Miami-Ft. Lauderdale metro area improved in a number of financial areas. For example, from 2010 to 2016, average credit scores rose from 646 to 658 and average credit card debt shrunk 13.6%. Those changes are both top 10 rates.

Overall Miami-Ft. Lauderdale scored in the top 20 in all of our metrics, suggesting residents here are taking a well-balanced approach to improving their finances.

9. San Francisco-Oakland-San Jose, California

Residents of the San Francisco-Oakland-San Jose metro area significantly improved in two metrics, launching the metro area up our rankings. From 2010 to 2016 the average credit utilization ratio dropped by over 3% – that was the biggest decrease in the study.

The average non-mortgage debt dropped by 14.66% from $51,078 and $43,589. That was the biggest decrease in the top 10 and the second-biggest in the study.

10. Ft. Myers-Naples, Florida

Ft. Myers-Naples takes the final spot in our top 10. In a previous study we found that residents in this area had successfully boosted the average credit score by 19 points from 2010 to 2016.

Homeowners here are also doing a better job at paying off their mortgages. After being badly hit by the housing crisis in the late 2000s, the mortgage delinquency rate is starting to drop in Ft. Myers-Naples. Our data shows that from 2010 to 2016 the mortgage delinquency rate in the Ft. Myers-Naples area dropped 8.7%. Only Las Vegas came close to matching that score.

Places Where People Are Taking Control of Their Finances

Data and Methodology

In order to find the places which are taking control of finances, we looked at data on 199 metro areas. Specifically, we looked at the following six metrics:

  • Percent change in average credit score. This is the percent change in the average credit score from 2010 to 2016. Data comes from Experian’s 2016 State of Credit Report.
  • Percent change in average credit card debt. This is the percent change in average credit card debt from 2010 to 2016. Data comes from Experian’s 2016 State of Credit Report.
  • Percentage point change in average credit utilization ratio. This is the percentage point change in average credit utilization ratio from 2010 to 2016. Data comes from Experian’s 2016 State of Credit Report.
  • Point change in late credit card payment rate. This is the change in the average credit card late payment rate from 2010 to 2016. Data comes from Experian’s 2016 State of Credit Report.
  • Percent change in average non-mortgage debt. This is the percent change in average non-mortgage debt from 2010 to 2016. Data comes from Experian’s 2016 State of Credit Report.
  • Percentage point change in mortgage delinquency rate. This is the percentage point change in mortgage delinquency rate from 2010 to 2016. Data comes from Experian’s 2016 State of Credit Report.

First, we ranked each city in each metric. Then we found each metro area’s average ranking giving equal weighting to each metric. Using this average ranking we assigned each city a score. The metro area with the best average ranking received a score of 100. The city with the worst average ranking received a 0.

Tips for Taking Control of Finances

If you’re feeling overwhelmed by your financial situation, you are not alone. Many people have high amounts of debt they have been ignoring or have made some mistakes in the past and now have a poor credit score. But it’s never too late to improve. Here are some tips to get your finances in better shape.

  • Raise your credit score: Your credit score impacts almost every personal finance decision you hope to make. Want to get a new credit card? The best credit cards, with the best rewards or the lowest APRs, go to people with best credit scores. Want to get a mortgage? With a poor credit score, you could lose thousands of dollars in interest payments thanks to a high mortgage rate, or worse you may get rejected for a mortgage altogether. The fastest way to raise your credit score is to look for inaccuracies, like delinquent accounts which do not belong to you, and get them removed. Once they are gone you should see an uptick in your credit score. Next you’ll want to get current on any overdue accounts that you may have. Working to pay off past-due accounts should help to greatly improve your credit score.
  • Lower you credit utilization rate: If your credit utilization rate is too high, one option is to ask to raise on your credit limit. Your credit card company is only likely to give you one if you have a good history with them. Other options are to pay down your credit card debt. Ideally you don’t want to have a credit utilization rate above 30%.
  • Pay off your debt: The smartest way to pay down debt fast, and to save money, is to aggressively tackle the debt with the highest interest rates. That means putting any extra income toward paying off things like credit card debt. One path people who are ready to be aggressive may want to consider is getting a balance transfer credit card card. These allow people to move their existing credit card debt to another credit card and pay no interest on the new card for a set period of time. That interest-free period is a perfect time to get rid of as much expensive credit card debt as you can. However, it only makes sense to get a balance transfer credit card if you are able to pay off your existing debt. Don’t use the interest-free period as an excuse to pile on more debt.
  • Make your credit card payments on time: One of the worst things you can do with your credit card debt is ignore it and rack up late fees and dings on your credit report. Even if you don’t have the money to pay off your credit card bills in full, it is crucial that you at least make the minimum payment and you make it on time every time.

Questions about our study? Contact us at press@smartasset.com

Photo credit: iStock.com/Peopleimages

Derek Miller, CEPF® Derek Miller is a graduate of the University of Edinburgh where he studied economics. He is passionate about using data to help people make better financial decisions. Derek is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. He is a data journalist whose expertise is in finding the stories within the numbers. Derek's writing has been featured on Yahoo, AOL, and Huffington Post. He believes the biggest financial mistake people make is waiting too late to save for retirement and missing out on the wonders of compounding interest. Derek lives in Brooklyn.
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