Households Climb Out of Financial Distress in Q2: CredAbility

U.S. households have found their way out of financial distress for the first time in nearly four years, with housing as the main reason for the improvement, according to the ""CredAbility"":http://www.credability.org/en/homepage.aspx Consumer Distress Index released Wednesday.

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Households found relief with their mortgages as homeowners refinanced and late payments hit a three-year low. Households were also better with budgeting, which helped them to save more.

U.S. households scored a 71.3 out of 100 in the second quarter of 2012, which is the first time the index rose above 70 since the third quarter of 2008. A score below 70 indicates a state of financial distress. Quarter-over-quarter, the ""index rose 1.4 points from 69.9"":http://dsnews.comarticles/average-us-households-almost-out-of-state-financial-distress-2012-05-16 and jumped 4.6 points over a one year period.

""Slowly but surely, consumers have worked to repair their finances during the past four years by paying down debt and better managing their credit, said Mark Cole, executive VP of CredAbility. ""They are more in control of their household budgets, increasing their savings even as gasoline prices have risen and the drought has started to affect food prices. While millions of people continue to battle unemployment, the majority of households with stable jobs and housing has made wise financial choices and are moving in the right direction.""

The quarterly index measures financial conditions based on five categories: employment, housing, credit, how families manage household budgets, and net worth.

While the mortgage delinquency rate helped the index by dropping to 6.55 percent from 7.64 percent in the first quarter of this year, the unemployment category dragged down the index. The unemployment made only a slight improvement from 59.4 to 59.8.

Even though the national index rose out of distress, several metropolitan areas stayed well below a score of 70. Among the larger cities (population of 2 million or more) in distress, three out of five were in Florida, with Orlando (59.47 percent) in the lead, followed by Tampa-St. Petersburg (60.13 percent), Riverside-San Bernardino (60.15 percent), Las Vegas (62.10 percent) and Miami-Fort Lauderdale (63.09 percent).

The least stressed metros with a larger population were Boston (77.42 percent), Washington, D.C. (77.14 percent), Minneapolis-St. Paul (76.97 percent), Dallas-Fort Worth (73.41 percent), and Denver (72.80 percent).

For metro areas with a population of 2 million or less, Omaha had the highest score at 79.6 while Bakersfield had the lowest score at 62.6.

The states that experienced the most financial distress were Nevada (62.70 percent), Georgia (65.38 percent), Mississippi (66.08 percent), Michigan (66.82 percent), and Florida (67.15 percent).

The least distressed states were mostly among the Plains States with North Dakota (84.79 percent) taking the first spot, followed by South Dakota (81.75 percent), Wyoming (81.59 percent), Nebraska (80.56 percent), Iowa (79.76 percent).