When a debt hasn’t been paid for a long time, the creditor may sell the debt to a collection agency. It’s then up to the agency to collect the debt. Having this on your credit report lowers your score significantly.
These collection accounts stay on a credit report for seven years and can keep you from getting credit elsewhere. The number of these collection accounts, the average balance on them, and the amount of change in those numbers between Q3 and Q4 of 2023 were all calculated.
According to WalletHub, these are the states with the most and fewest collections accounts.
The Most Collection Accounts
A lot of factors go into the states with the most of these accounts. The cost of living is often a factor as well as the difficulty of making ends meet. These states have the highest levels of collections accounts.
Wyoming
Wyoming is the number one state for its collection accounts status. It’s also seen a huge amount of change in its ranking for collection accounts- it moved by 39 spots into the top position. It has an overall score of 83.46.
Texas
Texas trails behind Wyoming with a score of 70.81. It’s moved up in rank by 19 spots. It ranks second for its collection accounts status. High inflation may be making things harder for the people of this state to pay their bills.
Montana
Montana isn’t a place that’s traditionally associated with a high cost of living, but many people in the state are finding it hard to make ends meet. The state gets a 69.69 for its collection accounts and has changed in rank by 24 spots.
Nevada
This state is feeling the high cost of living and has moved up 11 spaces on the list. The total score is 68.06 for the many collection accounts that are causing problems for Nevada residents.
Delaware
Far behind Nevada is Delaware. It gets a 59.88 for its number of collection accounts, the amount of debt on them, and how far it’s moved places. It’s up 31 spaces and into the top five.
Wisconsin
Almost tied with Delaware, Wisconsin has a total score of 59.83. Its number of collections accounts has given it a status ranking of 10. It has gone up the charts by 18 places.
The Least Collection Accounts
States that have the least number of collection accounts and lower amounts of debt on them often have a higher cost of living than other states. However, this isn’t always the case. Some states with the highest costs of living do very well, often driven by higher earnings in those states.
New York
Burdened with a high cost of living, this state nonetheless has the lowest number of collection accounts with lower debt on them. It’s changed by 22 spots to make it to number 50. It has a score of 21.95.
Mississippi
This is one state where you can see a correlation between one of the lowest costs of living in the country and a low level of collections accounts. The state has a score of just 24.90 and has changed by 16 spots.
Hawaii
Hawaii has the highest cost of living in the country, but it does have one of the lowest scores for collection accounts. The state gets a total score of 25.48 and has moved 37 spaces.
Massachusetts
Another state with a notoriously high cost of living, this state nevertheless has a very low number of collection accounts. It has a score of 27.62 and has moved six places from one quarter to the next.
North Carolina
Residents of North Carolina aren’t as stressed about debts as in some parts of the country. The state gets a 27.72 total score. It’s moved by only six places quarter over quarter.
New Jersey
The people of New Jersey don’t have a lot of debts that have gone to collections, and their score is 29.28. The higher cost of living here hasn’t kept people from staying current on their bills. The state has moved 25 places.