How Democrats and Republicans Compare in the Battle for Credit

Red States Have Lower Debt and Lower Credit Scores

How Democrats and Republicans Compare in the Battle for Credit
June 23, 2017

We all know the political stereotype – Republicans are supposedly the party of the wealthy, and Democrats are the party of the less economically advantaged (outside of Hollywood). How does this stereotype hold up with respect to credit scores and outstanding credit card balances?

A recent study by LendingTree provides some answers. Using the definition of states as Republican "red" or Democratic "blue" based on their voting in the 2016 general election, blue states have higher credit scores along with higher average credit card debt.

Blue state residents hold $6,702 in credit card debt on average, led by Connecticut's $8,857, spread across an average of 3.5 cards. The average credit score in blue states was 681 on the VantageScore 3.0 scoring system, with California, Hawaii, and the District of Columbia tying for the highest credit score at 694. DC represents an anomaly in that it has one of the lowest average debts (41st) while having the highest credit score – perhaps because it has the highest average number of credit cards (4) and likely a higher overall credit capacity, lowering the credit utilization of DC residents.

Red state residents hold a lower average debt of $5,475, topped by Alaska's $6,618. The average credit score in red states was 665, led by Utah's score of 683. Red states also have fewer credit cards on average – among red-state dwellers, North Dakota residents have the highest average number of cards at 3.1. The lowest average number of cards within blue states is 2.8, a greater average than 19 red states.

Across all states, the average credit card debt in the survey was $5,936 while the average credit score was 671. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

Does this survey contradict the stereotype, or is there more to the story? The results arguably reflect geography and the cost of living more than wealth assumptions. Red and blue states follow a general pattern with respect to credit score and a clear-cut pattern with respect to credit card debt.

Looking at average credit card debt, the top 11 states and 13 of the top 14 are primarily in the Northeast, the West Coast, and Alaska/Hawaii – all areas with the highest cost-of-living, according to an analysis by Conversely, the lowest 9 average credit card debts – and 19 of the lowest 21 – come mostly from the South and the Midwest. This matches up reasonably well with low cost-of-living numbers.

In short, areas with higher average credit card debt have higher average debts because residents utilize credit to maintain their budgets. Credit scores may make that task easier or more difficult depending on location, but people borrow based on needs. The LendingTree survey results may have less to do with the wealth that you have and more with the wealth that you need – or think you need – in order to live in your area.

LendingTree lists several other factors that explain the survey results, including culture (presumably this means rural vs. urban areas and the contrast in living standards) and economic opportunity. Concerns with economic opportunity and job losses in swing states may explain the red state vs. blue state distribution and how well it overlaps the cost-of-living map, and, in turn, average credit card debt. found in a separate study that states voting for Hillary Clinton had an average credit score almost 20 points higher than states that Donald Trump won – but the deciding factor may have been credit score drops in swing states such as Ohio, Pennsylvania, Michigan, Florida, and Iowa. These states apparently had more discontented voters looking for change, and Trump benefitted from their discontent.

Of course, it's up to you as an individual to keep your own debt at a controllable level, regardless of your state and the local political environment. Make a reasonable budget based on your income and stick to it.

It will be interesting to see whether the red vs. blue numbers change in the next election cycle – and if they do, whether they reflect a change in credit habits or a change in voting habits. After an election season like 2016, we wouldn't even attempt to predict the result, or the reasoning behind it.

If you owe on one or more credit cards with high interest rates, a balance transfer card could be a great way to consolidate your debt and save money. Check out MoneyTips' list of balance transfer cards.

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