These States Have the Biggest Debt Problem in America

Allison Kade

Jul 31, 2019

Household debt in the U.S. is the highest it has ever been. According to the New York Fed, total household debt reached $13.67 trillion in the first quarter of 2019, an increase of 0.9% from the fourth quarter of 2018 and nearly $1 trillion above its previous peak in 2008.

These statistics make sense in the larger context of the national economy. In general, household debt decreases during recessions, and increases during economic booms. That’s because banks often tighten borrowing requirements during recessions, making it difficult for consumers to take out loans.

With the U.S. economy more than ten years into its longest-ever expansion, it isn’t surprising that total household debt has increased for 19 consecutive quarters.

Debt isn’t a bad thing in itself, since debt can finance a variety of purchases, like homes, cars and education. But debt can become problematic if the borrower can’t repay the loan. Across all households, the percentage of loan balances in serious delinquency (90+ days late) is currently 4.5% for auto loans, 7.8% for credit card payments, 1.1% for mortgages and 11.4% for student loans.

Delinquencies also follow the ups and downs of the economy. During recessions, more people tend to skip out on their debt repayments; during periods of economic expansion, delinquencies tend to decrease. At the peak of the Great Recession in late 2009, 11.8% of total loan balances were at least 30 days delinquent. Compare that to the beginning of 2019, when that number was just 4.6%.

In other words, more Americans today effectively manage their debt and pay their bills on time.

“The key to managing debt is planning . . . Before you take on debt, you need to know three things: why you plan to take on the debt, how you are going to repay it and the date by which you will repay it,” explains Rod Griffin, Director of Consumer Education and Awareness at Experian.

People with certain loan types, in certain age groups and in certain states have more trouble paying off debts than others. To better understand how debt affects American families, financial services company Fabric analyzed statistics from the Federal Reserve Bank of New York, the U.S. Census Bureau, the Bureau of Labor Statistics and Experian.

For each state, Fabric calculated a composite score based on 90+ day delinquency rates for auto loans, credit cards, mortgages and student loans.

Here’s what Fabric found:

Key Takeaways

Mortgage delinquencies have steadily decreased over the past decade. But student loan, credit card and auto loan delinquencies have all increased from 2018 to 2019. Combined with the generally strong economy, that suggests lenders are allowing consumers to borrow more money than they can afford—something families should bear in mind.

The data also shows that young households are especially prone to missing payments. According to Griffin, “There are many reasons people miss loan payments. Often, it’s as simple as forgetting to send the payment. Automated payments systems can be a great tool.”

For young families, auto loans and credit card debt are particularly troublesome. Young adults under 29 are far more likely to fall behind on their auto loan and credit card payments.

As you might expect, there’s a strong link between payment history and long-term financial health. Across the U.S., strong payment histories are correlated with higher credit scores, easier access to capital and lower poverty rates. Conversely, loan delinquencies are associated with lower credit scores, limited access to capital and higher rates of poverty. This data further underscores the importance of managing debt and building strong credit from an early age.

Some states have a higher rate of debt delinquency than others. This may be a result of local lending and borrowing practices, as well as social and economic differences.

If you live in a high-debt state, keep this in mind when considering a new loan. Fortunately, Griffin explained, people typically don’t incur unmanageable debt overnight (even if it feels that way!). It takes a long time to accumulate significant debt—and it takes time to recover.

So, recognizing those patterns as early as possible can make it easier to dig yourself back out. Great non-profit organizations like the National Foundation for Credit Counseling provide assistance to families and individuals looking to get back on their feet in all 50 states.

Here are the states with the biggest debt problems:

The 15 States With the Worst Debt

15. Georgia

Overall delinquency index: 60.0
Auto loan delinquency: 5.9%
Credit card delinquency: 7.7%
Mortgage delinquency: 1.0%
Student loan delinquency: 13.1%
Average credit score: 654
Poverty rate: 13.3%
Household debt per capita: $48,370

14. New York

Overall delinquency index: 61.3
Auto loan delinquency: 3.6%
Credit card delinquency: 8.3%
Mortgage delinquency: 2.2%
Student loan delinquency: 8.6%
Average credit score: 688
Poverty rate: 13.4%
Household debt per capita: $49,680

13. Texas

Overall delinquency index: 64.4
Auto loan delinquency: 5.3%
Credit card delinquency: 8.7%
Mortgage delinquency: 0.9%
Student loan delinquency: 13.7%
Average credit score: 656
Poverty rate: 13.4%
Household debt per capita: $43,660

12. South Carolina

Overall delinquency index: 64.5
Auto loan delinquency: 6.1%
Credit card delinquency: 7.8%
Mortgage delinquency: 1.1%
Student loan delinquency: 13.1%
Average credit score: 657
Poverty rate: 15.6%
Household debt per capita: $43,880

11. Kentucky

Overall delinquency index: 64.7
Auto loan delinquency: 4.6%
Credit card delinquency: 7.4%
Mortgage delinquency: 1.2%
Student loan delinquency: 16.0%
Average credit score: 663
Poverty rate: 14.4%
Household debt per capita: $34,010

10. Arkansas

Overall delinquency index: 66.0
Auto loan delinquency: 5.0%
Credit card delinquency: 9.1%
Mortgage delinquency: 0.9%
Student loan delinquency: 14.4%
Average credit score: 657
Poverty rate: 14.8%
Household debt per capita: $32,790

9. Delaware

Overall delinquency index: 68.7
Auto loan delinquency: 5.1%
Credit card delinquency: 8.5%
Mortgage delinquency: 1.9%
Student loan delinquency: 10.3%
Average credit score: 672
Poverty rate: 9.2%
Household debt per capita: $54,200

8. Alabama

Overall delinquency index: 69.2
Auto loan delinquency: 6.2%
Credit card delinquency: 7.7%
Mortgage delinquency: 1.0%
Student loan delinquency: 15.2%
Average credit score: 654
Poverty rate: 15.0%
Household debt per capita: $36,780

7. West Virginia

Overall delinquency index: 72.2
Auto loan delinquency: 5.0%
Credit card delinquency: 7.8%
Mortgage delinquency: 1.0%
Student loan delinquency: 18.0%
Average credit score: 658
Poverty rate: 17.3%
Household debt per capita: $29,430

6. Oklahoma

Overall delinquency index: 77.0
Auto loan delinquency: 5.4%
Credit card delinquency: 8.7%
Mortgage delinquency: 1.2%
Student loan delinquency: 15.6%
Average credit score: 656
Poverty rate: 12.6%
Household debt per capita: $34,370

5. Nevada

Overall delinquency index: 80.9
Auto loan delinquency: 5.1%
Credit card delinquency: 10.4%
Mortgage delinquency: 1.2%
Student loan delinquency: 14.3%
Average credit score: 655
Poverty rate: 13.7%
Household debt per capita: $52,770

4. Florida

Overall delinquency index: 83.8
Auto loan delinquency: 5.3%
Credit card delinquency: 9.7%
Mortgage delinquency: 1.6%
Student loan delinquency: 13.7%
Average credit score: 668
Poverty rate: 13.7%
Household debt per capita: $45,300

3. Louisiana

Overall delinquency index: 86.1
Auto loan delinquency: 6.4%
Credit card delinquency: 8.1%
Mortgage delinquency: 1.7%
Student loan delinquency: 15.2%
Average credit score: 650
Poverty rate: 21.4%
Household debt per capita: $38,160

2. New Mexico

Overall delinquency index: 86.9
Auto loan delinquency: 6.3%
Credit card delinquency: 8.9%
Mortgage delinquency: 1.5%
Student loan delinquency: 15.2%
Average credit score: 659
Poverty rate: 18.6%
Household debt per capita: $39,650

1. Mississippi

Overall delinquency index: 100.0
Auto loan delinquency: 6.6%
Credit card delinquency: 8.4%
Mortgage delinquency: 1.7%
Student loan delinquency: 18.3%
Average credit score: 647
Poverty rate: 18.3%
Household debt per capita: $32,100

Methodology & Full Results

Statistics on delinquencies and per capita household debt are from the Federal Reserve Bank of New York Q4 2018 Quarterly Report on Household Debt and Credit. Poverty rates are from the U.S. Census Bureau Current Population Survey. Unemployment rates are from the U.S. Bureau of Labor Statistics 2018 Local Area Unemployment Statistics. Credit scores are from the Experian 2017 State of Credit.

To identify the states with the biggest debt problem, a composite index (from 0 to 100) was calculated based on the four different delinquency rates listed—auto loans, credit cards, mortgages and student loans. For the purpose of this analysis, “delinquency rate” is the percentage of total debt that is 90+ days delinquent. An index of 0 indicates that the state has the lowest delinquency rates across the four loan types among all states, and an index of 100 indicates that the state has the highest delinquency rates among all states.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

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