In March 2023, a survey conducted by CNBC in collaboration with Momentive found that 70% of Americans feel stressed over their personal finances and 52% said this financial distress increased since before the COVID-19 pandemic. A new report by WalletHub compared how each state ranked and Texas came up third.
“Financial distress can be a vicious cycle,” said in a statement Cassandra Happe, one of WalletHub’s analysts. “People who can’t make payments on their accounts end up damaging their credit scores, which in turn makes it more difficult for them to qualify for the best solutions to their debt.”
According to WalletHub, one reason for such a high ranking for the 8th largest economy in the world is the low credit card scores of its residents. As previously reported by Local Profile, the average American is just below the bottom of the ‘good’ credit range, which is 700 and the beginning of the ‘excellent’ credit range is 750. But in Texas, that number drops to 674, which isn’t bad, but it’s bad enough for grating the state the 6th worst credit score in the U.S.
However, another finding of the report might be more worrisome. In the past year, Texas saw a whopping 21% increase in non-business bankruptcy filings, ranking number 1 in that category. This dramatic rise in people filing for bankruptcy between 2022 and 2023 could be explained by the withdrawal of the federal aid put in place during the COVID-19 pandemic.
According to Debt.org, in 2022, bankruptcy statistics from the United States Courts showed that bankruptcy filings dropped 6.3% when compared to 2021. As the federal aid ended, bankruptcy filings started soaring, with a nationwide 19% increase by January 2023.
But that’s not all. On top of the credit card scores and bankruptcy filings, the report found that a portion of Texans are struggling with mortgage payments. Nearly 7% of the state’s residents have an account in forbearance or with deferred payments, the 10th highest in the U.S.
Above Texas in the ranking are Louisiana and Mississippi, landing numbers 1 and 2 respectively. In Louisiana, one of America’s states most vulnerable to natural disasters, 11.6% of the population have a credit account where they were temporarily banned from making payments due to financial difficulty. Mississippi on the other hand, has the highest poverty rate in the U.S.
“If you are in financial distress, some of the best options to pursue are debt settlement, debt management and free credit counseling,” Happe said. “If your credit score hasn't been damaged too much yet, you may be able to save a lot of money through debt consolidation.”
