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Improving Credit Scores

At SmartAsset we talk a lot about the importance of maintaining a high credit score. An excellent credit score allows you to gain access to the best rewards credit cards, the lowest mortgage rates and other financial perks. But the benefits from increasing your credit score can be hard to quantify. With that in mind, we crunched the numbers to find the places where credit card users would benefit the most by improving credit scores.

Sitting on a ton of credit card debt? Consider using a balance transfer card to help pay it off.

We looked at data on median individual incomes, average APRs, credit scores and credit card debt. We used this data to estimate how much a 50-point increase in the average credit score would lower the average credit card APR for each metro area.  Using these numbers we determined how much it would cost to pay off the average credit card debt, before and after increasing the average credit score. See our data and methodology section below for more on the formula we used to do this and where we got our data.

Key Findings

  • Big savings to be had  We found that in some areas, people can save more than $2,000 in credit card interest by increasing their credit score 50 points.
  • Stay aggressive  In our model of credit card payments, we assumed the average person would dedicate 5% of his annual income to paying off credit card debt. Depending on your situation that may make sense. But try to put as much as you can toward paying down credit card debt. Even for cardholders with high credit scores, credit cards come with high APRs, so the sooner you pay the debt, the less you pay in interest.
  • Trouble in Texas – Half of the metro areas in our top 10 are in the Lone Star State.  The reason for this is twofold. First, residents in these cities tend to have a lot of credit card debt, meaning a decrease in the interest rate they are paying will have a large effect. Second, these cities tend to have relatively low individual median incomes. This means it takes residents longer to pay off debt, and when it comes to credit card debt, the longer you have it the more it costs.

Where Cardholders Can Save the Most by Improving Credit Scores

1. Harlingen-Weslaco-Brownsville-McAllen, Texas

According to our estimates, the average credit cardholder living in this area could save just under $5,000 from raising her credit score by 50 points. That’s almost $2,000 more than the metro area in second place.

One reason residents of the Harlingen-Weslaco-Brownsville-McAllen metro area have the potential to save so much is that, due to their low median income, it takes them a long time to pay off credit card debt.

According to our data if the average resident in the area put 5% of her annual income toward paying credit card debt, she’d only be paying about $72 per month. At that rate it would take just over 17 years to pay off $4,617 in credit card debt with a 17.75% APR. ($4,617 is the average credit card in the area.) However a 50-point increase in credit score would move the average APR down to 15.39%, enabling residents to pay off their credit card debt in 136 months, or just over 11 years.

2. Columbus, Georgia

Columbus, Georgia comes in second with an estimated savings of $3,052. Residents here have $5,589 in average credit card debt and an average credit score of 642. This gives them an estimated APR of 17.17%. By raising that credit score by 50 points – to 692 – we estimate they would have an average APR of 14.81%. That 2.5% difference on the interest rate can save residents over $3,000.

Of course, if they are able to improve their credit score even more, say to the 700+ range, they could unlock access to credit cards with the lowest APRs.

3. Lubbock, Texas

Lubbock residents have the third-highest average credit card debt in our top 10. Unfortunately for them they also have a relatively low average credit score of 645, putting them in the fair range. By increasing that credit score by 50 points, we estimate cardholders could lower their APR from 17.02% to 14.67%. This would yield them a savings of about $2,800 over the life of their credit card debt (using the area’s average credit card debt as a model).

One of the best strategies for aggressively tackling high credit card debt is to use a balance transfer credit card. This gives users a grace period to pay off debt during which interest isn’t accrued. For example, let’s assume the average resident in Lubbock transfers $5,722 (the area’s average credit card debt) to a balance transfer card with a 18-month 0% APR offer. If he is able to pay $317.88 toward credit card debt per month, he’d be debt free by the end of the period (assuming he did not add any debt to the original amount).

4. Waco-Temple-Bryan, Texas

The Waco-Temple-Bryan metro area ranks fourth. The average resident has the potential to save just over $2,400 by raising his credit score 50 points. Improving the area’s average credit score by 50 points would mean going from 656 to 706. This would lower the estimated interest rate from 16.54% to 14.18%.

Like other cities above, residents in this metro area are extending the pain of credit card debt by not paying it down aggressively enough. Our data shows that if Waco-Temple-Bryan residents were spending 5% of their average monthly income on credit card debt, that payment would only amount to $92.50 per month.

5. Corpus Christi, Texas

Corpus Christi residents could save just under $2,200 by increasing their average credit score from 639 to 689. Increasing credit scores would lower the estimated APR from 17.34% to 14.98%. Our data shows that Corpus Christi residents could pay off their credit card debt roughly two years sooner by improving credit scores.

6. Greensville-New Bern-Washington, North Carolina

Residents of the Greensville-New Bern-Washington area are losing an estimated $2,100 thanks to their low average credit score. According to our data, if residents here increased their average credit score by 50 points, they would lower the estimated APR by 2.3%.

This would lower the interest payment on $5,292 in credit card debt from $6,097 to $4,027. And yes, you’re reading that sum correctly. By spending only 5% of the median income on the average credit card debt of $5,292, residents end up paying almost $6,100 in interest.

7. Dothan, Alabama

Dothan residents had one of the lowest average credit card debt totals in the top 10. So why do our estimates say they could save so much by improving credit scores? Income.

According to Census Bureau data, 5% of the median monthly income in Dothan is only $91.21. Spending that toward an average credit card debt of $5,400, means that debt’s going to stick around for a while. And it’ll cost you. Overall we estimate that an increase of 50 points on the average credit score in Dothan could save the average resident $1,928.

Fortunately Dothan residents are already working with the third-highest average credit score in the top 10 (a score of 657).

8. San Antonio, Texas

We estimate that if the average San Antonio resident improved her credit score by 50 points, she could save $1,920 on credit card payments. The reason she’d save so much is that the expected APR would drop from 16.73% to 14.37%.

San Antonio residents earn about $26,255, on average. That’s the second-highest salary in the top 10, after Anchorage. San Antonio also has the second-highest average credit card debt in the top 10 at $6,211.

9. Anchorage, Alaska

Our data shows that the average Anchorage resident has a whopping $7,520 in credit card debt. That’s by far the highest in the top 10. But, as we mentioned previously, Anchorage residents also have the highest salaries in the top 10 – again, by a fair amount.

We found that increasing the average Anchorage resident’s credit score by 50 points, the estimated APR would be lowered from 15.91% to 13.55%. This could result in just under $1,850 of savings on credit card interest.

10. Mobile-Pensacola-Fort Walton, Alabama

Mobile-Pensacola-Ft. Walton rounds out our top 10. Our data suggests that residents stand to save around $1,791, by improving the average credit score by 50 points.

According to our estimates, the new credit score would lower the average APR from 16.32% to 13.96%. In turn, this lower APR would allow residents to pay off their credit card debt earlier. Our estimates show that before improving credit scores, the average resident would pay $5,650 in interest on the average credit card debt of $5,678. After improving credit scores that interest would drop to $3,859.

Where Cardholders Can Save the Most by Improving Credit Scores

Data and Methodology

In order to find the places where cardholders can save the most by improving credit scores, we analyzed data on 202 metro areas. Specifically we looked at data on the following four factors:

  • Average credit score. This is the average credit score for residents in each metro area. Data comes from Experian’s 2016 State of Credit Report.
  • Average credit card debt. This is the average credit card debt for residents in each metro area. Data comes from Experian’s 2016 State of Credit Report.
  • Median individual income. Data comes from the Census Bureau’s 2015 1-Year American Community Survey.
  • Average APR for credit cards. Data comes from

After collecting all the data, we found the expected APR the average resident in each city would pay. In order to do this we took data from This data showed that someone with a credit score of 740 could expect to pay an APR of 12.59% and someone with a credit score of 515 could expect to pay an APR of 23.20%. We then created the following formula to model the relationship between credit score and APR:

APR = credit score*(-0.00047) + 0.4748

Using this formula, we found the expected APR in each metro area given the area’s average credit score. We then measured how long it would take the average resident of each metro area to pay off the average credit card debt, using the expected APR from the average credit score and assuming the resident pays 5% of income. Using the length of time to pay off the credit card debt, we found the total interest paid.

We then gave each city a 50-point boost on the average credit score. After, we ran the improved credit score back through the above formula to find the new expected APR. We repeated the above process to see how long it would take to pay off the average credit card debt with the new APR. We also calculated how much in interest the average resident could expect to pay.

Finally we compared the interest costs in the two scenarios. We ranked the metro areas from highest difference in interest cost to lowest.

Tips for Improving Credit Scores

This study looked at how much credit cardholders can save by improving credit scores. What are some of the best ways to boost your score?

The first thing you will want to do is get a hold of your credit report. You can get a free credit report from each of the three credit reporting bureaus – TransUnion, Experian and Equifax. Once you have your credit report you will want to carefully look it over and flag anything which might be incorrect. This includes seemingly small things like your home address. But the most important disputes are about accounts you don’t own. If the debt isn’t yours, you should dispute it.

Next you should work on getting your accounts in tip-top shape. This means paying any debts which you’ve been ignoring, and bringing your accounts up to date. While doing this may be painful in the short run, it will do wonders for your long-term financial health. Generally speaking, you should look to pay off the debt which has the highest interest rates first. This will help you save a bit of money.

There are other things you can consider doing like asking for an increase in your credit limit. This will lower your utilization rate, an important determinant of your overall credit score. However you should only ask for an increase to your limit, if you’re using your credit cards responsibly.

Questions about our study? Contacts us at

Photo credit: ©

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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