Credit ratings below national average for Arkansas cities

Arkansas consumers are often conservative when it comes to borrowing and typically have a lower annual salary than the national average, which partially explains why credit scores of many Arkansans trail the national average.

A recent report from WalletHub indicates that Bella Vista residents’ average credit score ranked in the 91st percentile, with only 8% of the country ranking higher.

Bella Vista is a bedroom community for many execs with Walmart Stores and the supplier sector as well as a retirement destination for railroad and auto workers. It’s no surprise the city of 37,000 commands the highest credit score rating in the state.

Neighboring Bentonville commands the highest home prices in the state with some of the highest incomes being home to Wal-Mart Stores but ranks a distant second to Bella Vista in the WalletHub report. The city’s average credit score of 677.75  is only slightly better than half of the rest of the country in the 56th percentile among 2,570 U.S. cities in the report.

Rogers, the largest city in Benton County, ranked in the 43rd percentile with a score of 666.15. In other words, 57% of the cities in the report around the national had a higher score. (See list below for rankings of other Arkansas cities.)

Median household income in 2014 in Arkansas was $41,262, with the U.S. average at $53,657, according to the U.S. Census department.

Thirty-eight cities across the country shared the highest credit scores at the 99th percentile. Those cities include:
• Saratoga, Calif.; at 755.7
• Potomac, Md.; at 748.03
• Southlake, Texas; at 740.41
• Chesterfield, Mo.; at 739.79

Credit rating companies typically consider scores of 700 or better to be “good” credit risks. Fair credit scores are ranked between 680 to 620 and anything below 500 is considered a “bad” credit risk. Experian reports that the median credit score in the U.S. is 723, with the average score being 692.

At the bottom, West Memphis ranked in the 1st percentile with a score of 586.18, which is deemed “poor” by credit rating companies. Only slightly better, Pine Bluff ranked in 2nd percentile with a score of 612.04, also deemed weak credit. The majority of Arkansas cities ranked in the “fair” credit categories, which was slightly lower on average than the 692 median score for the U.S.

Financial experts agree that many consumers don’t really know what goes into their credit score, and one of the largest components of the score is a consumer’s “available credit” relative to their overall debt. Robert McLeod, professor of finance at the University of Alabama, said consumers shouldn’t be afraid to ask for a credit line increase with an existing credit card as it could have a positive impact by increasing your available credit relative to your debt outstanding.

“This approach is better than applying for an additional card,” he said.

Daniel Roccato, assistant professor of finance at Rutgers University, said credit utilization – the amount of credit someone has available relative to how much they have used – is a big part of the overall score. Roccato said it’s okay to open another of line credit to help raise an overall score, but the consumer should not use that credit line.

Both professors said the other key component to the score is paying all debts on time, and continually paying down credit card debts without adding to the charges.

CREDIT RANKING SCORES BY CITY (list shows score and percentile in parenthesis)
Bella Vista, 717.16 (91)
Bentonville, 677.75 (56)
Fayetteville, 670.42 (48)
Rogers, 666.16 (43)
Benton, 661.47 (38)
Conway, 660.84 (37)
Russellville, 659.20 (35)
Van Buren, 652.83 (28)
Fort Smith, 649.52 (25)
Jonesboro, 648.55 (24)
Batesville, 647.30 (22)
Springdale, 645.86 (20)
Little Rock, 643.49 (18)
North Little Rock, 631.28 (8)
Pine Bluff, 612.04 (2)
West Memphis, 586.19 (1)