PhotoMuch is made of income inequality in America, but wealth-building often begins with a good credit score. A high score provides access to credit and helps people save money by getting lower insurance rates and paying less in interest.

Lots of things go into a good credit score, including low credit card debt and timely bill-paying. But researchers at FitSmallBusiness.com say where you live could also make a difference.

When they measured credit scores across the U.S., the researchers found a distinct pattern: people with the highest credit scores tended to live in northern states while those with lower scores called southern states home.

While it may be risky to generalize, the editors at FitSmallBusiness say the numbers don’t lie. The 12 states with the highest average credit score among consumers are all located north of the Mason-Dixon line, with the exception of Hawaii, which lies in the middle of the Pacific Ocean.

The 12 states with the worst average credit scores are all in the South or Southwest, with the exception of Nevada.

Education could be a factor

The report pulls no punches. It attributes the disparity due to “poorly ranked educational systems and a heavy dependence on government aid.” The researchers say they also found southerners are more likely to have filed for bankruptcy than northerners, a lead weight on a credit score.

"None of this means that any individual northerner is more credit-worthy than any individual southerner," said Sarah Wright-Killinger, the managing editor at FitSmallBusiness. "But, it is interesting to see how credit scores and location correlate."

The Consumer Federation of America (CFA) says education about the importance of credit scores also makes it more likely a consumer will have a higher credit score, and the agency says that knowledge has been moving backward in recent years.

Credit knowledge is slipping

In its ninth annual credit score survey, CFA and VantageScore Solutions, LLC, reveal that consumer knowledge about credit scores and how they work is at the lowest level in the last eight years.

When quizzed on basic aspects of credit scores and how they are compiled and used, correct scores fell by as much as 20 percent. For example, only 66 percent of respondents knew that maintaining a low credit card balance was a contributing factor to a good credit score, down from 85 percent in 2012.

Ironically, the percentage of respondents who said they considered their knowledge of credit scores excellent or good rose from 54 percent to 60 percent.

“Consumers know less about credit scores but think they know more,” said Stephen Brobeck, CFA senior fellow.  “Taking our online credit score quiz provides an easy way for consumers to update their credit score knowledge.”

How much do you know about credit scores? You can find out by taking CFA’s Credit Score Quiz.

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