Credit health is key when it comes to achieving homeownership, and while it isn't the only indicator, a credit score is an effective barometer used widely by creditors and lenders to weigh an applicant's financial risk. Researchers at WalletHub studied more than 2500 American cities and ranked them according to credit score.
Adam McCann, a financial writer for WalletHub adds the caveat that credit scores aren’t solely a reflection of responsibility.
"It’s possible to have your credit score drop due to financial hardship that’s out of your control," McCann wrote. "Luckily, research shows that the government stimulus in response to the COVID-19 pandemic actually helped increase the average credit score in 2020, in part due to enabling record-high debt paydowns."
It is important to add that other recent studies have added insight into how lenders assess credit. For example, the Urban Institute studied the importance of expanding access to mortgage credit to make homeownership more attainable for minority demographics—researchers there say that to truly capture the borrowers' creditworthiness, "the housing industry must rethink how it qualifies borrowers for mortgages, update current credit scoring models, take into account additional data such as on-time rental payments, reexamine how it takes a borrower’s debt-to-income ratio into account, and more fully count the income of those who are self-employed or have gig-economy income." Another study by the same organization explored the pandemic's disproportionate impact on persons of color.
That said, when looking solely at credit scores, cities in Florida and Arizona occupy the top four spots for high credit scores—that's The Villages, Florida; Sun City West, Arizona; Sun City Center, Florida; and Green Valley, AZ—followed by Los Altos, California at No. 5, according to WalletHub.
Hover over your area on the map to see where it stands on the list:
While several experts interviewed by WalletHub agree that there is no quick fix for wanting credit scores, Ann Holmes (Assistant Dean, Finance and Administration at University of Maryland's College of Behavioral and Social Sciences) says consumers who are able to improve their "utilization rate" could experience quick positive effects.
"There are only two ways to do this," Holmes said. "Pay down your outstanding balances to as low as possible and/or call your credit card company and ask them if they would consider increases the amount of your available credit. That will impact your credit score quickly."
Borrowers hoping to improve credit scores and overall creditworthiness must remain patient and vigilant when it comes to good financial habits, the panel of financial pundits who offered insight agreed.
"I think the biggest mistake people make is that they think building the credit score or going from a bad credit score to a good one is going to happen overnight," said Jamie Wagner (Assistant Professor Director, Center for Economic Education, Department of Economics at the University of Nebraska at Omaha). "It is going to take a long time and it takes diligence. It is not just changing a few things, it is committing to better financial behaviors including being mindful with budgeting and sticking to the budget, being careful with credit cards, and thinking about the long-term financial goals. Finances are a long-term game."