• Alaska has the highest credit card debt per capita in the United States.
  • New York and Maryland are included on Credio's top ten list.
  • Credit card debt in New York peaked the same year new foreclosure legislation was enacted.

Although sparsely populated compared to the rest of the nation, Alaska was recently rated as the state with the highest credit card debt per capita by personal finance website Credio. However, two more densely populated states also made the list: Maryland and New York.

Credit is one of those paradoxical magnets where the only way to get more of it (higher credit score) is to actively pursue maintaining less of something else (debt). Similar to golf, where the goal of practicing is to ultimately play the least amount possible, credit scores increase by continuing to accrue debt at a manageable and relative pace.

Credio ranked the top ten states according to credit debt per capita, including the percentage of credit cards that were 90 days or more delinquent on payments.

Credit card debt state rankings

Maryland earned the no. 6 spot on the list with a per capita credit card debt of $3,430. But the state’s delinquency rate is only 6. 75 percent, significantly lower than the 2009 peak at 10.79 percent.

Maryland credit card debt

Snapshot of Maryland credit card debt per capita

New York ranked no. 7 on the list. Currently, the credit card debt per capita totals $3,380 with 8.24 percent of those credit cards delinquent. The per capita number peaked at $4,150 in 2008, when delinquency was almost 10 percent.

In the same year debt peaked, Governor David Paterson signed the Foreclosure Prevention and Responsible Lending Act, providing consumer protection, support for high cost subprime loans and enforcing a 90-day notice before lenders could proceed with the foreclosure process.

New York credit card debt

New York credit card debt per capita.

Credit utilization

“Just on a basic level of credit scoring, which plays a huge role in being approved for a mortgage and buying a piece of real estate… I believe the utilization rate counts for nearly 30 percent,” said Simon Goldenberg, a debt relief lawyer based in Brooklyn.

Utilization of credit is the balance on the credit card. If the credit line is $10,000 and the balance is $8,000, the utilization is 80 percent. This utilization can be remedied (lowered) by either paying the debt down or increasing the credit line. High utilization affects the potential buyer’s FICO credit score.

“A person with a 740 credit score is going to get a 3.25 interest rate on FHA loan,” said LeeAnne Cox, senior mortgage specialist at Fidelity First Home Mortgage Company in Annapolis. “Somebody with 580 to 620 will be at 3.75 percent.”

Cox offered the example of how student loan, car payment, credit card and other debts begin to add up, regardless of well the debt is managed. She pointed to the debt-to-income ratio as the determining factor.

“Every loan works on debt-to-income ratio,” Cox said. “Your minimum payments are added up, and if you don’t make enough money and debt-to-income ratio is not there, you may not qualify for a loan.”

Cox said that approval for loans is dependent upon a 42 percent debt-to-income ratio. There are certain FHA and VA loans that allow for exception, but those are saddled with extenuating circumstances.

Goldenberg offered one piece of advice to credit card holders that he said is often overlooked when the utilization percentage is too high.

“Call the creditors. Just having a five minute conversation could result in an increase of thousands of dollars. Healthier utilization will help improve ones FICO score, and once that FICO score is improved it will improve credit worthiness.”

Email Britt Chester

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