Atlanta (Special to ZennieReport.com) – A WalletHub study of collection accounts in America provided data that shows there’s so much racism against blacks in lending, that the states with the most collection accounts have the largest numbers of white people as a percentage of that state’s population.
In other words, if one is white, bad credit just gets one more credit. If you’re black, you get no credit.
What Are Collection Accounts?
Collection accounts are those where is a debt that has gone unpaid for such a long period of time that the original creditor has decided to sell it to a debt collection agency, giving them the right to collect it instead.
Having collection accounts on your credit report is very bad for your credit score (especially since your score will already be heavily damaged by your previous lack of payments), and it will stay on your credit report for seven years.
Now, historically, lenders have been known to practice racial discrimination in who they give loans to. How does that impact the WalletHub study? Zennie62Media at Zennie62Media.com decided to put its thinking cap on and find out.
Racial Disparities in Mortgage Denial Rates are Present Nationwide
The Urban Institute released a troubling report on this problem. The report reads:
To conduct our analysis, we first examined denial rates by race and neighborhood racial makeup. We looked at applications for first-lien home equity loans in 2021. We defined majority-white areas as census tracts where white residents made up at least 50 percent of residents, and we defined neighborhoods of color as census tracts where white residents made up less than 50 percent of residents. Because we were particularly interested in how the proportion of white residents in a census tract affected denial rates for borrowers of color, we did not further disaggregate neighborhoods of color, which we recognize can mask important differences and should be a topic for future research.
For all applicants, the denial rate was 14.2 percent in neighborhoods of color and 9.4 percent in majority-white neighborhoods. Nationwide, racial disparities at the neighborhood level do occur and deserve attention.
Notably, among Black and Latino applicants, denial rates by neighborhood racial makeup differed by less than 2.2 percentage points. Black and Latino applicants remained more likely than white applicants to have their mortgage applications denied, regardless of neighborhood racial makeup.
From: How Local Differences in Race and Place Affect Mortgage Lending
Are States With The Most Collection Accounts Also Those With The Largest Minority Populations?
In order to identify the states where people have the most collection accounts, and thus where people’s credit scores and financial future are most in jeopardy, WalletHub compared the 50 states based on four key metrics, including the average number of collection accounts and the average balance, as well as the change in those values between Q3 2023 and Q4 2023.
“People who have collection accounts should focus on dealing with the issue as quickly as possible. While these kinds of accounts will stay on your credit report for seven years, paying off the balance can still improve your credit score. Other options aside from simply paying include settling with the debt collectors, setting up a debt management plan, or trying to wait for the statute of limitations to end. You should also know your rights to protect yourself from harassment by debt collectors.”
Cassandra Happe, WalletHub Analyst
Table of Contents
Main FindingsIn-Depth Look at the States With the Most Collection Accounts Methodology
WalletHub Main Findings
115050
| State | Rank |
|---|---|
| Wyoming | 1 |
| Texas | 2 |
| Montana | 3 |
| Nevada | 4 |
| Delaware | 5 |
| Wisconsin | 6 |
| Maine | 7 |
| Idaho | 8 |
| South Carolina | 9 |
| Kansas | 10 |
| Vermont | 11 |
| Georgia | 12 |
| Nebraska | 13 |
| Missouri | 14 |
| Kentucky | 15 |
| Oklahoma | 16 |
| Alabama | 17 |
| Tennessee | 18 |
| North Dakota | 19 |
| Iowa | 20 |
| Utah | 21 |
| Rhode Island | 22 |
| Ohio | 23 |
| New Mexico | 24 |
| Connecticut | 25 |
| Arizona | 26 |
| Indiana | 27 |
| Florida | 28 |
| Minnesota | 29 |
| Washington | 30 |
| California | 31 |
| Louisiana | 32 |
| Arkansas | 33 |
| Virginia | 34 |
| Oregon | 35 |
| West Virginia | 36 |
| Pennsylvania | 37 |
| Illinois | 38 |
| Alaska | 39 |
| Maryland | 40 |
| Michigan | 41 |
| South Dakota | 42 |
| Colorado | 43 |
| New Hampshire | 44 |
| New Jersey | 45 |
| North Carolina | 46 |
| Massachusetts | 47 |
| Hawaii | 48 |
| Mississippi | 49 |
| New York | 50 |
States with the Most and Fewest Collection Accounts
| Overall Rank* | State | Total Score | Collection Accounts Status Rank | Change in Average Collection Accounts Rank |
|---|---|---|---|---|
| 1 | Wyoming | 83.46 | 1 | 39 |
| 2 | Texas | 70.81 | 2 | 19 |
| 3 | Montana | 69.68 | 3 | 24 |
| 4 | Nevada | 68.06 | 5 | 11 |
| 5 | Delaware | 59.88 | 6 | 31 |
| 6 | Wisconsin | 59.83 | 10 | 18 |
| 7 | Maine | 59.76 | 7 | 28 |
| 8 | Idaho | 59.64 | 9 | 26 |
| 9 | South Carolina | 58.57 | 4 | 50 |
| 10 | Kansas | 56.44 | 8 | 46 |
| 11 | Vermont | 54.47 | 21 | 1 |
| 12 | Georgia | 53.93 | 12 | 30 |
| 13 | Nebraska | 52.73 | 13 | 36 |
| 14 | Missouri | 51.87 | 11 | 47 |
| 15 | Kentucky | 51.32 | 17 | 27 |
| 16 | Oklahoma | 50.87 | 16 | 33 |
| 17 | Alabama | 50.79 | 14 | 41 |
| 18 | Tennessee | 47.58 | 19 | 34 |
| 19 | North Dakota | 47.27 | 15 | 48 |
| 20 | Iowa | 46.54 | 18 | 42 |
| 21 | Utah | 44.88 | 20 | 43 |
| 22 | Rhode Island | 44.33 | 34 | 3 |
| 23 | Ohio | 43.58 | 22 | 38 |
| 24 | New Mexico | 42.92 | 29 | 9 |
| 25 | Connecticut | 42.25 | 30 | 12 |
| 26 | Arizona | 41.96 | 28 | 17 |
| 27 | Indiana | 41.91 | 25 | 21 |
| 28 | Florida | 41.84 | 24 | 29 |
| 29 | Minnesota | 41.72 | 36 | 4 |
| 30 | Washington | 41.26 | 32 | 14 |
| 31 | California | 40.64 | 35 | 8 |
| 32 | Louisiana | 39.59 | 27 | 31 |
| 33 | Arkansas | 39.32 | 26 | 35 |
| 34 | Virginia | 39.24 | 23 | 49 |
| 35 | Oregon | 38.06 | 40 | 2 |
| 36 | West Virginia | 36.33 | 31 | 44 |
| 37 | Pennsylvania | 35.25 | 33 | 45 |
| 38 | Illinois | 35.10 | 37 | 15 |
| 39 | Alaska | 34.15 | 39 | 13 |
| 40 | Maryland | 33.20 | 38 | 23 |
| 41 | Michigan | 32.66 | 42 | 10 |
| 42 | South Dakota | 32.63 | 45 | 5 |
| 43 | Colorado | 31.13 | 46 | 7 |
| 44 | New Hampshire | 29.82 | 43 | 20 |
| 45 | New Jersey | 29.28 | 44 | 25 |
| 46 | North Carolina | 27.72 | 41 | 40 |
| 47 | Massachusetts | 27.62 | 48 | 6 |
| 48 | Hawaii | 25.48 | 47 | 37 |
| 49 | Mississippi | 24.90 | 49 | 16 |
| 50 | New York | 21.95 | 50 | 22 |
Notes: *No. 1 = Most Collection Accounts
With the exception of “Total Score,” the columns in the table above depict the relative rank of each state, where a rank of 1 represents the worst conditions for that category.
In-Depth Look at the States With the Most Collection Accounts
Wyoming
Wyoming is the state with the most collection accounts, with an average of 4.1 accounts per resident in collections. Wyoming also has the highest average balance per collection account, at around $1,984. That’s a lot of money to have debt collectors hounding you for, especially if you have multiple accounts.
Collection accounts aren’t increasing as quickly in Wyoming as they are in other states, though. Wyoming only had the 14th-highest increase in the number of accounts per person between Q3 2023 and Q4 2023, and had a small decrease in the average balance.
Texas
Texas has the second-most collection accounts, with an average of 3 of that type of lending accounts per resident in collections. The average balance per account is around $1,403, which is the 17th highest in the country.
Texas ranks around the middle of the country when it comes to recent increases in the number and size of such accounts. Residents had the 20th-highest increase in the average balance between Q3 2023 and Q4 2023, and ranks 24th in the number of accounts per person with a small decrease.
Montana
Montana ranks third, with an average of nearly 3 collection accounts per resident in collections. Montana residents also have the ninth-highest balance per those types of accounts, at around $1,513.
The average collection account balance in Montana increased sharply between Q3 2023 and Q4 2023, rising by around 5.4%, the fourth-highest increase in the nation. However, there was also a significant decrease (around 2.7%) in the number per person. It’s good that people are paying off existing collection accounts, but they still have a lot of work to do when it comes to reducing their other balances.
Wyoming, A State That Is 83 Percent White, And With No African American Residents, Has Most Collection Accounts
In the WalletHub study, Wyoming emerged as the state that has the most collection accounts. But a look at that states demographics reveals the following:
The 5 largest ethnic groups in Wyoming are White (Non-Hispanic) (83%), White (Hispanic) (5.67%), Two+ (Non-Hispanic) (2.76%), Two+ (Hispanic) (2.17%), and Other (Hispanic) (2.04%). 6.85% of the households in Wyoming reported speaking a non-English language at home as their primary shared language.
So, this proves that a state with a predominantly white population, Wyoming, has the most collection accounts, ostensibly because its residents are allowed to get loans and credit, in the first place.
In other words, racial discrimination in lending against black Americans benefits white Americans. Moreover, this article you’re reading exposes the lie that state populations that have black people by race are the riskiest to give credit to. This shows that states with mostly white populations actually show the greatest risk, and that fact is revealed by the high number of accounts in collection.
In addition, Montana, a state that is number 3 in the study, also has almost no black residents. The Census reports:
In Montana in 2022, 4.5% of the total population was Hispanic, 85.3% were White, 0.6% were Black, 5.9% were American Indian/Alaska Native and 1.1% were Asian/Pacific Islander. The demographic distribution of women and children in a state, county or city can have an impact on the rates of birth outcomes in that area.
Source: U.S. Census
Methodology
In order to determine the states with the most and least collection accounts, WalletHub compared the 50 states across two key dimensions: 1) Collection Accounts Status and 2) Change in Average Collection Accounts.
WalletHub evaluated those dimensions using 4 relevant metrics listed below with their corresponding weights, each metric being graded on a 100-point scale.
Finally, WalletHub determined each state’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.
Collection Accounts Status – Total Points: 75
- Average No. of Collection Accounts in Q4 2023 (per Resident in Collections): Double Weight (~50.00 Points)
- Average Collection Account Balance per Tradeline in Q4 2023: Full Weight (~25.00 Points)
Change in Average Collection Accounts – Total Points: 25
- Change in Average No. of Collection Accounts (per Resident in Collections) from Q3 to Q4 2023: Full Weight (~12.50 Points)
- % Change in Average Collection Account Balance per Tradeline from Q3 to Q4 2023: Full Weight (~12.50 Points)
Sources: Data used to create this ranking were collected as of March 21, 2024 from WalletHub database.