How is the economy doing? It depends on where you look. In some states, people are practically choking on credit problems, while in others, serious financial difficulties are relatively rare.

For example, more than one out of every 500 homes in Florida is in foreclosure, while foreclosures are virtually unheard of in North Dakota. Similar differences exist for credit ratings, bankruptcies, unemployment rates and credit card delinquencies.

To factor all this in and determine the best and worst states for credit conditions, looked at the following:

  • Average credit scores from Equifax
  • Foreclosure rates from RealtyTrac
  • Credit card delinquency rates from TransUnion
  • Unemployment rates from the U.S. Bureau of Labor Statistics
  • Bankruptcy rates from the American Bankruptcy Institute

Based on a combination of all these factors, the following are the best and worst states for credit conditions.

The best states for credit conditions

1. North Dakota. The economy in North Dakota continues to thrive, and credit conditions are excellent as a result. North Dakota has the lowest rates of foreclosures, credit card delinquencies, and unemployment in the United States. It has the second-lowest number of bankruptcies per capita, and the third highest average credit score. In other words, by any measure credit conditions in North Dakota are practically unbeatable.

2. (tie) South Dakota. Clearly, some of North Dakota's economic boom is rubbing off on its neighbor to the south. Having top-10 rankings in all the categories of this study lifted South Dakota into a tie for the No. 2 slot.

2. (tie) Vermont. After ranking third last year, Vermont climbed into a tie for second this year, largely on the strength of having the highest average credit score of any state in the union.

4. Montana. Montana ranked fourth for the third year in a row, with top-10 rankings for each of the criteria in this study.

5. Hawaii. Thanks to the third-highest average credit score and the fourth-lowest number of bankruptcies per capita, Hawaii was able to climb from seventh to fifth overall this year.

6. Nebraska. With top-10 rankings on every criteria except the bankruptcy rate, Nebraska was able to earn the sixth-place ranking for the third year in a row.

7. Wyoming. Climbing two slots from last year's ninth-place finish, Wyoming's strongest credit factors are its 4.0 percent unemployment rate, and one of the lowest rates of credit card delinquencies in the nation.

8. Iowa. While it slipped three places from last year, Iowa still earned a top-10 finish because it is above average in all categories, and among the ten best for low unemployment and low incidence of credit card delinquencies.

9. Minnesota. Having somewhat mediocre rankings for bankruptcies and foreclosures may have contributed to Minnesota slipping a spot from last year, but its residents still have one of the highest average credit scores in the U.S.

10. New Hampshire. The strongest attributes New Hampshire has going for it in this analysis are one of the 10 lowest unemployment rates of any state, and one of the 10 highest average credit scores.

The worst states for credit conditions

1. Nevada. Unfortunately, Nevada has earned the worst ranking in each of this study's four years now. The good news is that Nevada no longer has the highest unemployment rate in the country; the bad news is that it ranks in the bottom 10 states in all five categories of this analysis.

2. Georgia. There is reason to be very concerned about credit conditions in Georgia: not only has it finished second-to-last in all four years of this study, but Nevada is closing the gap.

3. Alabama. Alabama fell from sixth-worst to third-worst, largely because it has the nation's second highest rates of credit card delinquencies and bankruptcies.

4. Florida. Consistently having the highest foreclosure rate of any state is a big reason Florida has not been able to make it out of the bottom 10 in this study.

5. Mississippi. Dropping three spots in this year's survey, Mississippi is second-worst nationally in unemployment and credit card delinquencies.

6. (tie) Illinois. Bottom-10 rankings in foreclosures, bankruptcies and unemployment are the main reasons Illinois landed in the bottom 10 overall.

6. (tie) Indiana. Though it improved by three slots from last year, Indiana is still below average in all five categories, with foreclosures and bankruptcies being particularly acute problems.

8. Kentucky. Bottom-10 rankings in credit card delinquencies, unemployment and bankruptcies helped land Kentucky in the bottom 10 overall for the first time.

9. Louisiana. A first-time entrant into the bottom 10, Louisiana's biggest credit problem is having the second-worst average credit score in the nation.

10. (tie) Maryland. Another newcomer to the worst-states list, Maryland suffers from the second-highest foreclosure rate of any state.

10. (tie) Michigan. One of the country's highest unemployment rates contributed to Michigan's joining the worst states for credit conditions.

10. (tie) Tennessee. This is actually an improvement for Tennessee, which was fourth-worst last year. However, its bankruptcy rate remains the worst in the nation.

Bad credit conditions can be a contagion that drags down the business environment and the job market. Before you decide where to locate a new business or go to find a job, you should think carefully about how the local credit conditions might affect your chances of success.

Didn't see your state mentioned above? Here's the full list of state rankings:

Grid depicting 50 states and how they rank from best to worst credit conditions

Disclaimer: The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.

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