Why Whole Regions Have Better Credit Scores Than Others

Should creditors start focusing on where people live as much as how much money they make? Possibly -- at least until financial consumers in lower-credit rating states bring their game up a notch or two.

"Just as an individual's credit score is a measure of the risk that consumer presents to a lender, our study calculated the credit score that would correspond to the risk presented on average by residents of various metropolitan areas," said Heather Battison, a senior director at TransUnion responsible for consumer education. "We want to congratulate those cities that have the lowest average credit risk or the highest credit scores -- and help educate those with high credit risk or low credit scores."

One theory on the disparity of credit scores in geographical areas is the prevalence of college graduates in top-rated cities.

The San Francisco-San Jose area is home to some of the top colleges in the country, including Stanford and the University of California. So, too, in Boston, where Harvard, Tufts, Boston University and the Massachusetts Institute of Technology are either in the city or close by.

Private businesses tend to set up shop close to those college incubators (think Apple (AAPL) and Google (GOOG) in Northern California or Reebok, Gillette and Fidelity Investments in Boston. Those firms pay high salaries and good benefits to workers, and that could contribute to residents of those cities possessing higher credit scores.

Of course, that's no guarantee. Memphis, of course, is the headquarters of Federal Express (FDX), one of the largest and most successful companies in the world.

Whatever the reason, TransUnion says that beefing up a credit score is an attainable goal as long as you manage your credit right, make debt payments on time and keep debt balances low.

Do those three things and chances are your credit score will improve no matter where you live.

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