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There's no question that consumers are facing some tough economic headwinds: 40-year inflation highs, supply shortages of everything from sriracha sauce to used vehicles, and a stock market that lost more than 20% of its value during 2022. Amid all this uncertainty, however, now may be a good time to zoom out and observe how much the economic situation has collectively improved for Americans, some of whom were sidelined from being full participants in the economy just a decade ago.
Experian looked at the changes in three basic economic metrics—the percentage of Americans who are not unbanked or underbanked, average incomes (adjusted for inflation) and FICO® Scores☉ —to see how and where these measures of financial inclusion have improved since 2013.
The Unbanked and Underbanked: Who They Are, and How Many Households Are Affected
Unbanked consumers and households have no access to traditional banking products, such as personal checking accounts and savings accounts. As a consequence, many of the unbanked must use more expensive, inconvenient or otherwise less-beneficial alternatives—including prepaid debit cards, money orders and payday loans.
According to the most recent data from the Federal Deposit Insurance Corporation (FDIC), 4.5%, or about 6 million households, were unbanked as of 2021. It's a vast improvement from 2013, when 7.7% of households were unbanked.
The Percentage of Unbanked Americans Continues to Decline
There are also some consumers and households who have partial access to banking services. These consumers are referred to as "underbanked" by the FDIC. Unlike the unbanked, however, the underbanked may have one or more of these traditional banking products but also regularly use alternative financial services, such as money orders and check cashing services, to make transactions. In 2021, some 14.1% of U.S. households were underbanked, down from 20% in 2013.
Often, both the unbanked and underbanked use alternative services to make transactions that banks offer either for free or at a substantially lower financial cost.
Most States Have Seen Financial Inclusiveness Improve Since 2013, Some Dramatically
In 2013, the rate of unbanked and underbanked households reached nearly 50% in some states. We show the states where the percentage of unbanked has decreased the most since that time.
The good news: All but three states have fewer unbanked households than they did in 2013. And there's been significant improvement in some states where the proportion of unbanked households was much higher in 2013. Seven states, most of which are in the South, saw the percentage of unbanked households fall by 5 percentage points or more from their post-2013 peaks.
| Reduction of Unbanked Households by State | ||
|---|---|---|
| State | Unbanked Households, 2021 (%) | Change From 2013-2021 (Percentage Points) |
| Arizona | 3.6 | -9.2 |
| Arkansas | 3.4 | -8.9 |
| West Virginia | 3 | -8 |
| District of Columbia | 4.5 | -7.3 |
| Louisiana | 8.1 | -5.8 |
| Oklahoma | 5.4 | -5.5 |
| North Carolina | 3.3 | -5.1 |
| South Carolina | 5.5 | -5 |
| Texas | 5.6 | -4.8 |
| Virginia | 1.8 | -4.7 |
| New Jersey | 3.5 | -4.7 |
| Tennessee | 5 | -4.7 |
| Alabama | 4.7 | -4.5 |
| Kentucky | 5.2 | -4.5 |
| Wyoming | 1.3 | -4.3 |
| Georgia | 6.7 | -4.2 |
| Delaware | 2 | -4.1 |
| New Mexico | 7 | -3.9 |
| Ohio | 3.5 | -3.7 |
| Montana | 3 | -3.6 |
| Mississippi | 11.1 | -3.4 |
| California | 5 | -3 |
| Illinois | 4.4 | -3 |
| Oregon | 1.6 | -2.9 |
| Nebraska | 3 | -2.7 |
| Rhode Island | 3.5 | -2.7 |
| Wisconsin | 2.1 | -2.7 |
| Pennsylvania | 2.6 | -2.6 |
| New York | 5.9 | -2.6 |
| Florida | 3.7 | -2.5 |
| Idaho | 3 | -2.4 |
| Nevada | 5.6 | -2.3 |
| Hawaii | 1.5 | -2.3 |
| Kansas | 3.8 | -2.2 |
| Massachusetts | 3.6 | -2.2 |
| Utah | 1.2 | -2.1 |
| Washington | 2.1 | -2 |
| Indiana | 5.6 | -1.6 |
| Iowa | 3 | -1.5 |
| Missouri | 7.4 | -1.5 |
| New Hampshire | 1.4 | -1.5 |
| Minnesota | 2.4 | -1.2 |
| Connecticut | 4.4 | -1.2 |
| Maine | 1.3 | -1.1 |
| Vermont | 2.5 | -0.6 |
| South Dakota | 3.7 | -0.5 |
| Colorado | 6 | -0.4 |
| Michigan | 5.4 | -0.3 |
| Maryland | 5 | +0.2 |
| North Dakota | 3.2 | +0.4 |
| Alaska | 4.8 | +2.9 |
Source: FDIC; Experian calculations
The states at the bottom of the above table aren't necessarily laggards, as many of them already had fuller banking participation than other states that saw significant improvements over the decade. Overall, there's now less of a difference among the unbanked in the individual states now than in 2013.
States Where Personal Incomes Are Rising the Most
Personal income growth is one of the primary ways to measure a region's or area's overall economic health: Income on the rise usually translates into more economic consumption, which is the lifeblood of the U.S. economy. More economic activity, and more jobs, enable unbanked households to better participate in the financial system.
And more good news: All 50 states grew their incomes in the years leading up to the pandemic. Here, we see a significant Western tilt.
| Increase in Income by State | ||
|---|---|---|
| State | Average Personal Income, 2021 | Annualized Income Increase, 2013-2021 |
| California | $76,614 | 5.9% |
| Oregon | $61,596 | 5.6% |
| Washington | $73,775 | 5.6% |
| Utah | $56,019 | 5.5% |
| Nevada | $60,213 | 5.4% |
| Florida | $62,270 | 5.3% |
| Arizona | $55,487 | 5.1% |
| Colorado | $70,706 | 5.1% |
| Massachusetts | $83,653 | 5.0% |
| Georgia | $55,786 | 5.0% |
| North Carolina | $56,173 | 4.9% |
| Idaho | $52,369 | 4.8% |
| Maine | $58,484 | 4.8% |
| South Carolina | $52,467 | 4.7% |
| New Hampshire | $73,200 | 4.7% |
| New York | $76,837 | 4.7% |
| New Mexico | $50,311 | 4.6% |
| Tennessee | $56,560 | 4.6% |
| Illinois | $67,244 | 4.6% |
| Michigan | $56,494 | 4.6% |
| District of Columbia | $96,477 | 4.5% |
| Kentucky | $51,266 | 4.5% |
| Indiana | $56,497 | 4.5% |
| Rhode Island | $64,376 | 4.4% |
| South Dakota | $64,462 | 4.4% |
| New Jersey | $77,016 | 4.3% |
| Montana | $56,949 | 4.3% |
| Pennsylvania | $64,279 | 4.2% |
| Hawaii | $60,947 | 4.2% |
| Minnesota | $66,280 | 4.2% |
| Wisconsin | $59,626 | 4.2% |
| Alabama | $49,769 | 4.1% |
| Arkansas | $50,625 | 4.1% |
| Ohio | $56,879 | 4.1% |
| West Virginia | $48,488 | 4% |
| Virginia | $66,305 | 4% |
| Missouri | $55,325 | 4% |
| Vermont | $61,882 | 3.8% |
| Delaware | $59,931 | 3.8% |
| Mississippi | $45,881 | 3.7% |
| Maryland | $69,817 | 3.7% |
| Texas | $59,865 | 3.7% |
| Connecticut | $83,294 | 3.6% |
| Iowa | $57,163 | 3.5% |
| Nebraska | $61,205 | 3.5% |
| Louisiana | $54,217 | 3.4% |
| Wyoming | $69,666 | 3.3% |
| Kansas | $58,924 | 3.1% |
| Alaska | $65,813 | 2.8% |
| Oklahoma | $53,870 | 2.6% |
| North Dakota | $64,524 | 2% |
Source: Bureau of Economic Analysis
At the other end of the spectrum, many of the Great Plains states, crushed by floods and a boom and bust cycle that hit energy producers in the region earlier in the decade, have seen lower income growth.
Credit Scores Have Improved Across All States Since 2013
All 50 states saw average FICO® Score improvement from 2013 to 2021. Again, as with personal incomes, the bigger gains were in Western states. But the nation's capital and Michigan also observed significant improvement versus FICO® Scores earlier in the decade.
| FICO® Score Improvement by State | ||
|---|---|---|
| State | Average FICO® Score, June 2021 | FICO® Score Point Improvement, 2013-2021 |
| Nevada | 701 | 34 |
| District of Columbia | 717 | 31 |
| Arizona | 710 | 30 |
| Michigan | 719 | 30 |
| California | 721 | 29 |
| Washington | 734 | 29 |
| Florida | 707 | 28 |
| Oregon | 731 | 28 |
| Idaho | 725 | 27 |
| Delaware | 714 | 26 |
| Utah | 727 | 26 |
| Colorado | 728 | 25 |
| Georgia | 693 | 25 |
| Maine | 727 | 24 |
| South Carolina | 693 | 24 |
| Wisconsin | 735 | 24 |
| Indiana | 712 | 23 |
| Maryland | 716 | 23 |
| North Carolina | 707 | 23 |
| New Mexico | 699 | 23 |
| Virginia | 721 | 23 |
| West Virginia | 699 | 23 |
| Alaska | 717 | 22 |
| Hawaii | 732 | 22 |
| Mississippi | 681 | 22 |
| New Hampshire | 734 | 22 |
| Rhode Island | 723 | 22 |
| Tennessee | 701 | 22 |
| Kentucky | 702 | 21 |
| Minnesota | 742 | 21 |
| Montana | 730 | 21 |
| New Jersey | 725 | 21 |
| Ohio | 715 | 21 |
| Pennsylvania | 724 | 21 |
| Texas | 692 | 21 |
| Wyoming | 722 | 21 |
| Massachusetts | 732 | 20 |
| Missouri | 711 | 20 |
| New York | 722 | 20 |
| Illinois | 719 | 19 |
| Kansas | 721 | 19 |
| Louisiana | 689 | 19 |
| Vermont | 736 | 19 |
| Nebraska | 731 | 18 |
| Alabama | 691 | 17 |
| Arkansas | 694 | 17 |
| Connecticut | 726 | 17 |
| Iowa | 729 | 17 |
| Oklahoma | 692 | 17 |
| South Dakota | 733 | 15 |
| North Dakota | 733 | 14 |
Source: Experian
Bringing It All Together
Based on the observations above, the following six states and Washington, D.C., saw greater-than-average improvement in all three categories:
| States With Above-Average Improvement in Economic Well-Being, 2013-2021 | |||
|---|---|---|---|
| State | Change in Unbanked Households (Percentage Points) | Annualized Income Increase (%) | FICO® Score Improvement (Points) |
| Arizona | -9.2 | 5.1 | 30 |
| District of Columbia | -7.3 | 4.5 | 31 |
| Georgia | -4.2 | 5.0 | 25 |
| New Mexico | -3.9 | 4.6 | 23 |
| North Carolina | -5.1 | 4.9 | 23 |
| Oregon | -2.9 | 5.6 | 28 |
| South Carolina | -5 | 4.7 | 24 |
Source: Experian; based on FDIC, BEA and Experian data
Will Financial Inclusion Continue to Improve?
Cutting in half the number of households without a bank account over a decade is an achievement, but there's still some way to go. While the percentage of Americans with adequate access to banks and credit unions has improved markedly over the past decade, there are still about 5 million households that transact largely outside of the banking system, relying on more expensive means for virtually any type of financial transaction.
Percentage of Unbanked Persons or Households, Selected Nations
For their part, more than 200 banks are offering accounts designed to assist potential new customers gain access to low-cost, low initial deposit savings and checking accounts through Bank-On, a program by the nonprofit Cities for Financial Empowerment. Bank-On accounts were designed to assist the unbanked access to low-cost savings and checking accounts.
To find a bank with an account that best suits your needs, visit the FDIC's GetBanked program.
Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.
FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.