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Credit scores had always been a crucial factor when it came to personal finance, especially for securing loans, mortgages, and financing for major life purchases. Unfortunately, many Americans found themselves battling high interest rates due to lower credit scores. A recent analysis revealed an alarming trend among certain U.S. states—particularly those with a significant concentration of consumers facing a 7.250% interest rate, one of the worst on the market. What had been behind these inflated rates, and how had they impacted consumers after the 2024 election?
States with the Worst Credit Scores: Who Was Affected?
It came as a surprise that 27 states had tied for the worst credit score, with a national average standing at 7.250% interest rate. The 7.250% interest rate largely applied to borrowers with poor credit scores, so, if someone with a low credit score (e.g., 300s or 400s) had been applying for a loan, they likely would have been offered an interest rate like 7.250%. Among these states had been major players like California, Idaho, New York, Rhode Island, and Washington, marking a diverse spread across the country. Importantly, this trend hadn’t seemed confined to any one region—both East Coast and West Coast states had been represented, highlighting that high interest rates were a widespread issue.
While these states shared similar credit score outcomes, the consequences of such a score were far-reaching, affecting the everyday financial decisions of millions of Americans.
The Real Cost of a Higher Interest Rate
To understand the significance of this 7.250% interest rate, consider this: over the span of 30 years, even a slight difference in interest rates could have a major impact on the total cost of a loan. For example, if you had taken out a mortgage with a $150,000 loan and the interest rate had been 7.000% versus 7.250%, the difference could have cost you over $10,000 more in total interest over the life of the loan.
- At a 7.000% interest rate, the total repayment would have amounted to $251,116.
- At a 7.250% interest rate, the total repayment had ballooned to $262,050.
This had been a staggering difference that illustrated how even a modest increase in interest rates could have a profound effect on the affordability of housing, car loans, and other major purchases.
The rise in interest rates had been particularly problematic for borrowers who were already facing financial strain. As inflation continued to impact everyday life, many Americans had struggled to make ends meet. As a result, the cost of borrowing had become increasingly burdensome, especially for those in states with poor credit scores and inflated interest rates.
Political Implications after the 2024 Election: Taxes, Housing, and the Trump Administration
Looking back at the 2024 presidential election, discussions around taxes and housing policy had been top of mind. One of the key pieces of proposed legislation, the American Housing and Economic Mobility Act of 2024, sought to address these issues head-on. Among its proposals was a reduction in the taxable estate threshold, lowering it to $3.5 million for individuals, which would have increased the estate tax rate. This shift could have had significant effects on individuals’ wealth distribution and tax liabilities.
This policy change—and the future of the housing market—had been influenced by the outcome of the 2024 election. With Vice President Kamala Harris and former President Donald Trump both having strong stances on economic policy, the way forward for housing affordability and tax rates had hinged on who had won the White House.
Harris had focused on cutting housing costs as a major part of her platform. Given the significant interest rate disparities, especially in states with large Democratic majorities, it had been clear that Democrats positioned themselves as advocates for reducing housing costs and making homeownership more accessible.
What Did This Mean for Consumers?
For consumers in these states, the issue of inflated interest rates had been more than just a financial concern—it had been a matter of political and economic consequence. The decisions made in 2024 had had far-reaching impacts on housing markets, borrowing costs, and the ability to build wealth. Those with higher credit scores had likely benefited from reduced rates, but for many people living in these affected states, these higher costs had remained a challenge for years to come.
As the presidential race concluded with Donald Trump securing the presidency for a second term, one thing had been certain: policymakers would need to address these concerns if they wanted to help ease the financial burden on millions of Americans. Whether through tax reforms, housing policies, or changes to how credit scores and interest rates were handled, the past election had played a critical role in shaping the economic future of states grappling with the worst credit scores in the country.
Final Thoughts
The intersection of credit scores, interest rates, and political power had been a key issue in the 2024 election cycle. With many Americans facing financial struggles due to high interest rates, the election’s outcome would determine how states addressed these challenges. Housing affordability, tax policies, and economic mobility were central to the debate over creating a more equitable future for all Americans.
For consumers in these 27 states dealing with high interest rates, understanding the political landscape and upcoming policy changes was crucial. The next president’s economic agenda could help reduce borrowing costs and improve financial well-being. However, navigating these challenges also required smart financial planning. Crow Estate Planning and Probate offered expertise in estate planning, asset protection, and financial guidance, helping clients manage their wealth, reduce tax liabilities, and secure their financial future in the face of rising interest rates and credit score disparities.
