Revolving credit is a term used to describe credit that can be used again and again, and the account updates as it is charged up and debts are paid off each month. A credit card and a home equity line of credit are a good example of a revolving credit account.
A personal loan or a mortgage, on the other hand, which provides borrowers with a lump sum that is paid off over time, is considered a non-revolving credit account.
We took a deep dive into Experian's latest State of Credit report to see how different parts of the country manage revolving credit accounts and we came up a pretty interesting list of cities.
Revolving Credit Data: What Did We Look At?
The main thing we looked at in this deep dive into the data is credit utilization. Credit utilization is important when it comes to revolving credit because it accounts for how much of your credit you are actually using. It is generally expressed as a percent.
So, if you have a credit card limit of $1,000 and you are only using $100 of it at any given time, then your credit utilization rate is 10% (keep in mind, credit utilization, also known as debt-to-limit ratio, is the second-most important factor in most credit scores, trailing only your track record of paying bills on time).
A best practice to aim for is to make sure that your credit balances are never more than 30% of your total credit limit available. For example, if your total credit limit is $10,000, your total revolving balance shouldn't exceed $3,000. The lower your credit utilization rate, the better.
The United States is a pretty big place and we're a pretty diverse country in a few ways, including our finances. You'll find that when it comes to using credit, where we live could play a role in how much of our available credit we use. Let's take a look.
America has a 30% average credit utilization rate.
The Cities with the Lowest Revolving Credit Utilization
The Midwest continued to stand out among cities when looking at revolving credit utilization rates as 16 of the top 20 cities were all from that region. This trend also follows suit for this region that maintains one of the higher average credit scores, lower average debt, and fewer credit cards than most.
Sioux City, IA was tied with four cities for the lowest revolving utilization rate of 24% in 2017 along with Rochester, MN-Mason City, IA-Austin, MN., Mankato, MN., and Green Bay-Appleton, WI. The next four were also tied at 25% and those cities included Wausau-Rhinelander, WI, San Francisco-Oakland-San Jose, CA., Lincoln-Hastings-Kearney, NE., and Glendive, MT.
|The Cities with the Lowest Revolving Credit Utilization|
|1||Sioux City, IA||24%|
|1||Rochester, MN-Mason City, IA-Austin, MN||24%|
|1||Green Bay-Appleton, WI||24%|
|5||San Francisco-Oakland-San Jose, CA||25%|
|9||Cedar Rapids-Waterloo-Iowa City-Dubuque, IA||25%|
|9||Sioux Falls, SD (Mitchell)||26%|
The Cities with the Highest Revolving Credit Utilization
Fairbanks, AK claims the highest revolving utilization rate at 39% among all cities in the US for 2017. Greenwood-Greenville, MS is next with a 38% rate, followed by Columbus, GA at 37%.
|Top 10 Cities with the Highest Revolving Utilization|
|4||Riverside-San Bernardino, CA||37%|
|8||Corpus Christi, TX||36%|
|9||El Paso, TX||36%|
The States with the Lowest Revolving Credit Utilization
The Midwest stood out again for this credit category as seven states with the lowest revolving utilization rate percentage were from that area. Iowa, Nebraska, Wisconsin and North Dakota all earned the lowest average revolving utilization rate in the US at 26% for 2017. Massachusetts and South Dakota came in next at 27% followed by Kansas, Oregon, and Montana at 28%.
|The States with the Lowest Revolving Credit Utilization|
The States with the Highest Revolving Credit Utilization
The states with the highest revolving utilization rate percentage were mainly from the South with seven states all ranking from that region. Alaska owned the highest average revolving utilization rate in the US at 37% for 2017 followed by Mississippi at 35%. Louisiana, Georgia, and Nevada all had a 34% rate followed by Alabama and Texas at 33%.
|The States with the Highest Revolving Credit Utilization|
Why Does Revolving Utilization Matter?
Revolving utilization matters because lenders look at each of your revolving credit accounts, and their total credit limits and balances. If you have a large balance on a card it could signal that you are overextended with your credit card use.
This is often a concern for lenders in determining your ability to repay a debt or balance due and determine their decision in extending credit to you. Ideally, you want to maintain a good utilization rate on all your cards and not just a few.