Las Vegas & Nevada residents falling short when it comes to debt, collections, and credit.

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Residents of Las Vegas and Nevada are known for many things, including hosting millions of tourists, gamblers, and vacationers every year to the ‘Vegas Strip. But Nevadans are now known for another, more auspicious, reason: mismanaging their finances.

Unfortunately, that’s the ugly truth we find by looking into the wallets of the average Las Vegas or Nevada consumer – a fact that’s backed up by numerous studies, statistics, and credible sources.

Credit scores fall short in Las Vegas

For instance, WalletHub, a renowned financial data and analysis website, recently announced that Las Vegas Valley residents (characterized as the Southern Nevada area) have some of the lowest credit scores in the entire U.S.

In fact, they concluded that the median FICO score for Las Vegas citizens was only 646. (Credit scores range from 300 to 850, and a the higher the better, of course.)

A median score (which indicates that half of all scores are better and exactly half are worse), pegs Las Vegas as 1,792 out of 2,572 for U.S. cities, or only the 30th percentile nationally.

Credit scores for Northern Las Vegas were going bust even more frequently, with a median FICO of only 632.

Getting low marks for credit scores is also nothing new for Las Vegas residents, with both aforementioned areas ranking in the bottom 30th percentile for credit scores and other financial factors in 2016, 2017 – and now, 2018.

The one bright spot was Henderson, which registered a median credit score of 684 and led that region for the last three years.

Las Vegas money management woes

But it’s not just credit scores that are crapping out (the term for losing at the dice game of craps) when it comes to Las Vegas money management.

The region also suffers some of the most out-of-whack debt-to-income ratios in the country. When it comes to credit cards, car loans, student loans, and even payday loans, Las Vegas consumers do not bode well at all.

One telling statistic was published by the Urban Institute, which reported that 47 percent of Nevada residents have at least one debt that has been sent to collections. That’s an incredibly dire financial fact for the Silver State, with almost half of all consumers having debt in collections on their credit file!

To put that in perspective, the national average is that only 35 percent of consumers have at least one collection on their credit report, which amounts to about 77 million Americans.

In fact, only five metropolitan areas measured in the Urban Institute report have consumers with a collections rate above 45 percent. McAllen, Texas is the highest in the U.S. (51.7%), followed by our own Las Vegas, Nevada (49.2%), and then Lakeland, Florida ( 47.3%), Columbia, South Carolina (45.2%), and Jacksonville, Florida (45.0%).

Leading the nation in collections

Furthermore, among all of these consumers nationwide with collections, the average person in the greater Las Vegas metropolitan area now has $7,198 in collections, which leads the nation.

That’s about on par with average credit card debt for all consumers in Las Vegas, which stood at $6,474 last year. Clearly, some credit scoring and credit repair initiatives are due in Las Vegas to help consumers there escape from debt and save more.

Even levels of “good debt” in Las Vegas and Nevada – typically considered mortgage debt and home loans – has swelled to unhealthy levels.

The average debt-to-income ratio for mortgages in Nevada is about 437 percent, or more than one hundred points higher than the national average!

Reasons why – and reason to be optimistic

According to University of Las Vegas, Nevada professor Dr. Daniel Chi, there is good reason for Las Vegas’ credit and debt woes.

“Everyone knows our education level is fairly low, and by extension, our financial literacy level is also lower than the average,” says Dr. Chi. “Also, young people tend to have more debt. As we get older, we pay off our house and student loans, and our ratio gets lower.”

He also points out that the economy in Las Vegas is heavily reliant on the tourism industry (and gambling). For that reason, the region experiences more profound highs and lows, like a roller coaster, during periods like Great Recession when the unemployment rate in Las Vegas hit 13.7 percent.

But there still is hope, as the average credit score in Las Vegas has risen over the last two years, and with more financial education, credit score education, and credit repair in Las Vegas, they can build a brighter future.

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