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They say everything is bigger in Texas. But apparently that doesn’t apply to credit scores.

Credit reporting bureau Experian released its annual State of Credit report, which examines various statistics related to personal credit on both a national and local level. That includes ranking America’s cities by credit score, and once again many towns in Texas brought up the rear. Three cities in Texas – El Paso, Corpus Christi and Harlingen – appeared in the bottom 10, with Harlingen ranking dead last in the 143-city ranking. The rankings were done using the VantageScore, which ranges from 501-990.

Rod Griffin, Experian’s director of public education (and a Texas resident himself), says there’s nothing wrong with Texas – rather, the cities in question are simply struggling economically, which tends to correlate with lower credit scores.

“Where we’re seeing higher unemployment and lower income, we’re also seeing poor credit scores,” he says. “The South Texas area is struggling.” Indeed, Harlingen and El Paso have unemployment rates worse than the national average, and Jackson, Miss., which ranks second to last, is dealing with an unemployment rate of 10 percent. Every one of the bottom 10 cities can be found in the southern states, while the midwest accounted for eight of the top 10 best-scoring cities.

Of course, once you’ve hit bottom there’s nowhere to go but up, and that’s exactly what many of the bottom-ranked cities are doing. Harlingen’s average credit score of 688 is actually a 0.27 percent improvement over last year’s score, and Corpus Christi’s 706 is a 0.55 percent improvement.

In fact, the country as a whole is improving in its ability to manage its debt, albeit slowly. The average American credit score this year is 750, a modest 0.07 percent improvement over last year. That improvement comes despite the fact that Americans are taking on more personal debt than before, with the average person holding $24,890 in debt, an increase of 1.4 percent over 2011. That credit scores should improve even as debt load increases is explained by another key indicator: the average number of late payments, which fell nearly 2 percent this year.

“Paying bills on time is the key factor [in the score],” says Griffin. “The fact that people appear to be able to make their payments on time suggests that they have better control of the debts they have. And the fact that they’re increasing their debt load suggests they may have additional disposable income and are able to take on a little more debt.”

There is indeed a clear correlation between a city’s average credit score and how well it does in paying off its debts in time. In Minneapolis, the top-ranked city with an outstanding 787 average score, the average person has just 0.25 late payments per year; by contrast, the average person in Corpus Christi has 0.9 late payments in a given year, the worst average in the nation.

The key takeaway? If you want a good credit score, be more like a midwesterner and pay your bills on time. On-time payments have a huge impact on your credit score. You can see how late payments are affecting your credit score using the Credit Report Card, a free tool that grades you on each of the major credit score components.

The bottom 10 cities by average credit score:

10. Savannah, Ga. 713
9. Memphis, Tenn. 711
8. Myrtle Beach, S.C. 710
7. El Paso, Texas  710
6. Augusta, Ga. 710
5. Monroe, La. 709
4. Shreveport, La. 708
3. Corpus Christi, Texas 706
2. Jackson, Miss. 702
1. Harlingen, Texas  688

Image: iStock

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