People who live in red states are in more financial distress than those living in blue states, according to a recent WalletHub study.
Texas ranked at No. 1 on the study’s Top 10 financially distressed states, with Texan residents having the ninth-lowest average credit score in the country in Q1 in 2025. The state also had the third-highest number of accounts in forbearance or with deferred payments per person, as well as the seventh-highest share of people with these distressed accounts at 7.1%.
Florida (No. 2) and Louisiana (No. 3) followed closely behind Texas, with South Carolina’s placement on the list not too far off.
“Measuring the share of residents in financial distress is a good way to take the pulse of a state and see whether people are generally thriving or having trouble making ends meet,” said Chip Lupo, WalletHub analyst. “When you combine data about people delaying payments with other metrics like bankruptcy filings and credit score changes, it paints a good picture of the overall economic trends of a state.”
WalletHub defines a financially distressed account as one that is in forbearance or has its payments deferred.
To determine the most financially distressed states, WalletHub compared 50 states across nine key metrics in six categories, including credit score, people with accounts in distress, average number of accounts in distress, change in number of bankruptcy filings (March 2025 vs. 2024), “debt” Search Interest Index, and “loans” Search Interest Index. The study then determined the weighted average across all metrics to calculate an overall score for each state, using the resulting scores to rank-order the states.
Data used to create the study’s rankings were collected as of June 17, 2025, from the Administrative Office of the U.S. Courts, TransUnion, Google Trends and WalletHub database.
South Carolina ranked No. 5 when it comes to the most financially distressed states in the country, with an overall score of 56.49. This score is comprised of the following data:
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Credit score rank: 30
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People with accounts in distress rank: 2
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Average number of accounts in distress rank: 4
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Change in bankruptcy filings March 2025 vs. March 2024 rank 34
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“Debt” Search Interest Index rank: 22
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“Loans” Search Interest Index rank: 5
In WalletHub’s study, blue states scored an overall average rank of 32.95, while red states scored 20.94. The majority of financially distressed states in the study’s Top 10 are red states: