Low Credit Scores a Texas Problem
The Savvy Consumer

By Teresa McUsic,

Texans and DFW residents rank among the highest in terms of credit card debt burden, despite our relatively high incomes and low unemployment, according to reports from

Meanwhile, some 90 percent of Americans are not even taking the first step of assessing their financial health by getting a copy of their free annual credit reports, according to a report by the Consumer Financial Protection Bureau.

Looking up your credit report and then making changes in your credit life could save you hundreds if not thousands annually.

“Conventional wisdom says the more money you make, the higher your credit score,” said Matt Schultz, senior analyst with “That’s not necessarily the case.”

It is true in some states, like Minnesota, which ranked No. 1 in credit scores (averaging 701 out of 850) and No. 9 in income, according to the study.

But Texas was the fifth worst state when measuring our average credit score (651), yet the state median income was a relatively high 25th relative to other states, said the study, which got its data from credit bureau Experian and the U.S. Census.

A lower score can cost you significantly in interest income on everything from credit cards to auto loans to home mortgages, Schultzsaid.

“At 650 you’ll still have access to credit cards, but you’ll pay on the higher edge of the APR (annual percentage rate) range, which is typically 12.99 to 24.99 percent,” he said. “With traditional lending—auto loans and mortgages—a score of 650 will also cost you.”

How much you say?

A loans savings calculator at can spit out the numbers easily.

For example, a 30-year fixed mortgage for $100,000 would cost $57,723 in interest over the life of the loan if you had a 3.3% APR from a credit score of 760-850, FICO says. But with a lower FICO score of 620-639, you would get a rate of 4.9 percent and pay $90,515 in interest, or almost $33,000 more.

The same holds true for an auto loan. A 36-month new auto loan for $25,000 would cost someone with the higher credit score around $1,300 in interest with a 3.3 percent interest rate. But with the lower credit score, the interest would climb to almost $5,900 with a 14.2 percent interest rate, according to the FICO calculator.

Carrying a balance on credit cards also costs and DFW residents are paying for it.

The study found DFW ranks just behind San Antonio as the worst major metropolitan area in terms of credit card debt. Houston ranked 5th in this study.

The average balance of DFW residents was $4,900, which the study said would take 14 months to pay off with a minimum payment and cost $382 in interest.

Here are four ways to shore up your finances relating to debt, increase your credit score and save some money:

*Get your free credit report. Check your three credit reports at no cost at or call 877-322-8228. You will need to use your Social Security number. The online process is smoother than a few years ago. Checking one report every quarter will help protect you against fraud as well as give you a good picture of how you are using your debt.

* Get your free credit scores, go to, or Also, check with your credit card company. Discover Financial, American Express, Citigroup, JP Morgan Chase, Bank of America, USAA and other banks are now offering free FICO scores to their customers on their monthly bills. If you aren’t getting it, ask your bank when they are adding it.

* Learn what goes into a credit score and what does not. is a great place to find out how scores are assessed and which parts of your financial life are part of the score, and which are not. For example, your salary, employment history and child support are not included in your score.

* Take action. Paying your bills on time, keeping your credit card balances low and not applying for too many cards at one time will affect your score, Schultz said. Set up payment reminders to stay on track and if you are having trouble paying, contact your card company or a credit counselor. Also remember an account that goes to collection, even if paid off, will remain on your credit report for seven years.

Teresa McUsic’s column appears in the Fort Worth Star-Telegram.