OpportunityTexas is working at the statewide and local levels to expand economic opportunity throughout the state. One of our emerging areas is credit building: identifying workable partnerships and platforms to improve Texans’ creditworthiness. Of course, a good credit score is an essential ingredient for financial stability and moving ahead. As many readers know, your credit score is the equivalent of your financial identity in the credit market. Individuals with low credit scores pay a large premium to access credit, or are funneled to alternative financial services and subprime products. For several years, we have known that Texans have one of the lowest average credit scores in the U.S. In fact, Texas consumers have held the bottom spot as recently as 2008. Texas is a big state, and many stakeholders and partners have been curious about their community’s specific credit profile. Well, the wait is over!

This year, OpportunityTexas collaborated with the Social IMPACT Research Center to obtain and analyze credit scores and debt by Texas county and municipality for June 2009. Over the next year, we will be seeking partnerships with organizations interested in knowing, understanding, and improving their local credit profile, with the hopes of raising awareness about the role of Texas’ current credit and debt conditions on economic development and growth.

Published in July 2011, Credit & Debt in Texas Counties draws from a 5 percent random sample of a major credit bureau’s database, including how much consumers owe on a particular account, or tradeline. The analysis covers nine specific tradelines, including student loans, first mortgage, and credit cards issued by financial institutions.

The report also covers the share of trades past due, as well as those accounts in bankruptcy. Additionally, it covers the geographic variation for credit limit utilization, average credit score, and the percentage of residents with subprime or excellent credit scores. Once again, this information is collected and reported at the county and municipal levels.

Credit score data from other states show that more populous counties tend to have, on average, lower credit scores than sparsely populated counties. In Texas, low average credit scores appear to be concentrated along the Lower and Middle Rio Grande Valley, along with parts of the Panhandle, West Texas, and East Texas. For example, Texas’ average credit score is 674, well below the national average (700), and many counties have subprime average credit scores. Additionally, we can organize this data at the Council of Government (COG) level.

For our purposes going forward, we will use the following scale in categorizing credit scores in Texas:

• Excellent (740 or above)
• Average to good (660-739)
• Subprime (580-659)
• Poor (579 or below)

In Texas, over 41% of Texas consumers fall into the subprime or poor credit category.

Compared to other states, this is where Texas ranks on a host of important credit and debt indicators:

• 47^th in share of trades past due;
• 46^th in average credit score;
• 47^th in the share of consumers with “poor” credit scores (below 580); and,
• 50^th in high auto finance debt.

Shortly, we will be receiving an update of this information for 2011. We would love to collaborate with communities and local organizations on approaches to improve credit profiles for their clients and communities and raise awareness about the importance of good credit.

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