Like most Americans, residents of the Badger State like to take out the measuring stick and see how we rank against other states — especially when it puts us in a good light.
Yes, that applies to sports, where we follow the ups and downs of the Packers, Badgers, Brewers and Bucks. We track their rankings (and argue about them) with typical cheesehead sports frenzy.
But it extends to other areas as well, so we took note when we saw a report recently that put Wisconsin right near the tippy top of the country when it comes to money management.
We were ranked tied for third in the U.S. in a study by CreditCards.com that looked at income and average FICO scores in 50 states and the District of Columbia.
FICO scores are important because they are used by lenders to determine credit worthiness and risk — and can affect the interest rate a consumer pays. The name FICO is actually a mash-up of the names Bill Fair and Earl Isaac, the founders of a company in 1956 that was the first to offer a credit risk model with a score. It is used by 90 percent of top lenders.
So, puff up your chest, Wisconsin: We’re Number 3.
We were topped in the money management ranking by South Dakota, which had a modest median income rank of 33, but was tied for second in average credit score rank — giving it the top ranking.
Montana was second, with a median income rank of 39 and an average credit rank score tied for 11th.
Then comes the Badger State, with a median income rank at 24th and an average credit score rank of 5th. That put us in a trio with Maine and Vermont.
Notably, the top five was dominated by states with large rural populations — and not states with higher personal incomes. And, in fact, the District of Columbia was tops in median income, but had an average credit score risk of 32 and was ranked at the bottom of the money management study.
That was a bit of a surprise to CreditCards.com. The report said: “The hypothesis was that states with higher incomes would have higher credit scores. It didn’t always turn out that way, however.”
“It shows that it’s not just about how much you have, but also how you manage it,” said CreditCards.com industry analyst Ted Rossman, according to news reports on the study. “In some of these high-cost states, even though they make more, it goes right out the window. In D.C., they have the highest income in the country, but they also have more debt than anyone else.”
“Lifestyle creep and a high cost of living can drag you down. These places with higher credit scores have lower delinquencies. They’re paying their bills on time,” he said.
“It is better to live in a low-cost place even if you don’t make as much. It seems to stretch further,” he added.
Ah, yes. Making things stretch; paying your bills on time. We’re no strangers to that.
That’s called being frugal and prudent — and that’s something that has never gone out of style here in the Heartland. It’s about getting, and giving, good value. That’s part of the DNA of the Badger State, it’s right up there with neighborliness.
So, no, we were not surprised by this high ranking for our money management skills — but we do take pride in it. And we’ll keep it in mind as we head out in the snow and cold to get started on our Christmas shopping. We know those charge cards will have to be paid off in short order by January — and we have our national reputation as solid money managers to protect.
This editorial is reprinted with permission from the Racine Journal Times.