By Charles H. Green
At the risk of sounding like a broken record, there is more good news about subtle but definitive economic improvement that should encourage small business lenders about the strengthening business climate ahead.
Earlier this year, Experian released their 3rd annual “State of Credit” report that reflected the best (and worst) cities according to average consumer and business credit scores. The information is useful data that can help lenders assess credit applicants as well as review lending policies.
What city has the best average consumer credit scores? Minneapolis, MN with an eye-popping average of 787. In fact the top ten cities range from 777 up to 787 and are all Midwestern cities except two: San Francisco, CA (783) and Boston, MA (778).
Where is the lowest score? Harlingen, TX has the worst average consumer credit scores at 668. All of the worst 10 cities are in the South, stretching from El Paso, Texas (710) to Myrtle Beach, South Carolina (710).
The average business credit risk scores mirror the same cities with best and worst consumer scores.
Other good news from the report:
• The national average credit score rose in 2012 by 1 point to 750;
• The average national consumer outstanding credit total is up slightly to $24,890 (from $24,542), with the average available credit for consumers at 70.51%.
Credit scores are effective tools for lenders to assess how business owners manage their personal financial affairs and disclose how they have complied with obligations to other creditors. Scores should be used in context with a range of other tools to analyze credit applications and not be a substitute for full underwriting.