Study ranks US states with most financially-distressed residents

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LOS ANGELES - A recent study by WalletHub revealed surprising insights into which U.S. states have the most financially-distressed residents. Published on July 17, the study titled "States with the Most People in Financial Distress" used nine key metrics, including credit score changes and internet searches for "debt" and "loans," to determine the results.

"Our data set includes factors like the average credit score, the change in the number of bankruptcy filings between March 2023 and March 2024, and the share of people with accounts in distress," WalletHub explained.

Which states have the most financially-distressed residents?

WalletHub ranked the U.S. states from least-to-most financially-distressed residents. Here are the top 10 states with the most financially-worried residents:

Michigan
Texas
Nevada
Tennessee
Rhode Island
Georgia
Louisiana
North Carolina
Mississippi
New York

Why is Michigan the most financially-distressed state?

WalletHub discovered that Michigan was the most financially-distressed state after finding that the Great Lakes State had "the most accounts per person in financial distress, meaning accounts where the account holder was temporarily allowed to not make payments due to financial difficulty."

"Michiganians also had the second-highest increase in the share of people with distressed accounts between Q1 2023 and Q1 2024, at over 70%," the study added.

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What factors contribute to financial distress in Texas?

Despite Texas having a $2.4 trillion economy, the Lone Star State followed Michigan in financial distress. WalletHub reported that Texans face several economic struggles, highlighted by the fact that residents had the third-lowest average credit score in the country in Q1 2024. Texans also search Google for "debt" and "loans" at a high rate, indicating a significant need to borrow despite already owing money.

How does WalletHub measure financial distress?

According to WalletHub analyst Cassandra Happe, measuring states by financial distress is an efficient way "to take the pulse of a state and see whether people are generally thriving or having trouble making ends meet."

"When you combine data about people delaying payments with other metrics like bankruptcy filings and credit score changes, it paints a good picture of the overall economic trends of a state," Happe said.

Which regions have the least financially-distressed residents?

While there were no clear-cut trends concerning different U.S. regions, the least financially-distressed states tended to be in New England and the Midwest. Here are the top 10 states with the least financially-distressed residents: