Metro areas with the best and worst credit ratings

(ARA) – How does your hometown stack up with other areas of the country when it comes to credit scores?

Just as students around the country receive their academic grades throughout the school year, TransUnion recently revealed a ranking of metropolitan areas with the best and worst credit grades in the country. The metropolitan area at the very top of the class is the Minneapolis-St. Paul region, which includes the Twin Cities and surrounding areas in Minnesota and Wisconsin. Ranking lowest is the Memphis, Tenn. metropolitan area, which includes the city of Memphis and surrounding areas in Arkansas and Mississippi.

The ranking is the first of its kind from TransUnion, which determined the five metropolitan statistical areas with the largest percentage of As, and Fs, based upon the VantageScore credit scoring model. VantageScore is a highly predictive and consistent consumer credit scoring model first developed by all three major credit reporting companies together. Consumer scores fall within a range of 501 to 990, with higher scores representing a lower likelihood of risk. At TransUnion.com, each score delivered is accompanied by a letter grade (901 to 990 scores receive an A, 900 to 801 ratings a B, 800 to 701 ratings a C, 700 to 601 ratings a D, and 600 to 501 ratings an F).

“Because lenders have so many scoring models at their disposal, it’s rare when the credit score they receive for a consumer and the score the consumer obtains for himself actually match, and that causes a lot of confusion,” says Heather Battison, director of education for TransUnion consumer products. “That’s why the A to F academic-style letter grade that comes with every VantageScore consumers obtain at TransUnion.com is so beneficial. If my grade is an A, I innately understand that means a lender is likely to view my creditworthiness in a very positive light; and that’s primarily what I want to know.”

Whether your credit receives high grades or could use some work, TransUnion provides the following tips to keeping your credit healthy:

* Study your situation. Proactively manage your credit and risk for identity theft with an ongoing credit monitoring product. This will help you understand your financial situation. Then create a plan to position yourself better in the eyes of the lender.

* Don’t be tardy with your payments. A history of late payments – even by a few days – can potentially harm your credit score.

* Manage your debts. Keeping high balances relative to credit limits on key credit accounts can likely have a negative impact on a score, so concentrate on paying down debt. As a rule of thumb, keep these balances at or below 30 percent of your total available credit to present the best possible financial image to lenders. Set budget goals and use only cash if you can’t seem to master your credit card habit.

* Give yourself time. Long-term credit relationships and a diverse mix of credit accounts may help you achieve a higher credit score. Avoid closing credit cards and other accounts that have been paid on time over a long period, as it can make your credit history appear shorter and could affect your score.

* Limit inquiries. Every time you apply for a new credit card, you should expect that an inquiry will appear on your credit report. Frequent credit card inquiries can make it look like you have a cash flow problem and may lower your credit score. However, when you shop for mortgage or auto loan rates over a two to three week period, credit scoring models typically factor the resulting inquiries together as a single item. This enables you to shop for favorable loan rates with minimal impact to your credit score.