Cities Taking on the Most Debt During COVID-19

The COVID-19 pandemic has created financial problems for many Americans who have lost their jobs, had their work hours reduced or incurred expensive medical bills. As a result, some people have been forced to go further into debt to avoid falling behind on bill payments and to purchase necessities.

People in some cities are more financially stable than others, though. In order to determine where people have the biggest need for credit, WalletHub compared 100 cities across 20 key metrics. Our data set compares the last two quarters of 2020 in terms of factors such as the change in credit-card debt, average mortgage balance and average utilization rate on lines of credit.

Main Findings

Cities Taking on Most Debt

Ask the Experts

The COVID-19 pandemic continues to impact Americans’ need for credit, and WalletHub turned to a panel of experts for further insight. Click on the photos of the experts below to read their bios and see their responses to the following key questions:

1. Is now a bad time to start building credit?
2. Creditors are lowering credit limits in response to the COVID-19 crisis. How will this impact individuals already in the credit market? How about those interested in opening a credit line?
3. What can be done to reduce the risk of HELOC fraud?
4. What does the future hold for the real-estate and auto-finance markets?
5. What should be the main focus of local authorities when developing financial recovery plans?

Methodology

In order to determine the cities where people need credit the most, WalletHub compared the 100 most populated cities across 20 key metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the highest need for credit.

We then determined each city’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.

• Credit Card Debt Increase in Q4 vs Q3: Full Weight (~5.00 Points)
• Auto Loan Debt Increase in Q4 vs Q3: Full Weight (~5.00 Points)
• Mortgage Debt Increase in Q4 vs Q3: Full Weight (~5.00 Points)
• Student Loan Increase in Q4 vs Q3: Full Weight (~5.00 Points)
• Average Credit Card Balance in Q4: Full Weight (~5.00 Points)
• Average Mortgage Balance in Q4: Full Weight (~5.00 Points)
• Average Auto Loan Balance in Q4: Full Weight (~5.00 Points)
• Average Student Loan Balance in Q4: Full Weight (~5.00 Points)
• Average Utilization Rate for Credit Cards in Q4: Full Weight (~5.00 Points)
• Average Utilization Rate for HELOCs in Q4: Full Weight (~5.00 Points)
• Average Utilization Rate for Lines of Credit Q4: Full Weight (~5.00 Points)
• Average Increase in the Utilization Rate for Credit Cards in Q4 vs Q3: Full Weight (~5.00 Points)
• Average Increase in the Utilization Rate for HELOCs in Q4 vs Q3: Full Weight (~5.00 Points)
• Average Increase in the Utilization Rate for Lines of Credit in Q4 vs Q3: Full Weight (~5.00 Points)
• Number of Inquiries per 1,000 People With a Credit Report in Q4: Full Weight (~5.00 Points)
• Increase in the Number of Inquiries per 1,000 People With a Credit Report in Q4 vs Q3: Full Weight (~5.00 Points)
• Average Number of Tradelines Opened per 1,000 People With a Credit Report in Q4: Full Weight (~5.00 Points)
• Increase in the Average Number of Tradelines Opened per 1,000 People With a Credit Report in Q4 vs Q3: Full Weight (~5.00 Points)
• Average Number of Credit Cards per 1,000 People With a Credit Report in Q4: Full Weight (~5.00 Points)
• Increase in the Average Number of Credit Cards per 1,000 People With a Credit Report in Q4 vs Q3: Full Weight (~5.00 Points)

 
Sources: Data used to create this ranking were collected from WalletHub research.

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