LendingTree Ranks States with the ‘Healthiest’ Borrowers

Five states top a new LendingTree report that analyzes the financial health of prospective borrowers ranking each state based on a 100-point scale.

Washington, D.C., New Jersey, Hawaii, Massachusetts and California lead the nation with the healthiest prospective borrowers with scores at above 90.

The index is calculated using a weighted average of credit score, loan-to-value ratio “and overall lendability of mortgage-seekers” for the second quarter of 2013.

The findings show an encouraging “shift towards more responsible borrowing, higher credit scores and improved LTVs,” said LendingTree founder and CEO, Doug Lebda, making it easier for consumers to qualify for mortgages as the housing market bounces back and credit is becoming more accessible.

The average LTV ratios and credit scores for the top five states are 85.3% and 689 in Washington, D.C., 83.9% and 679 in New Jersey, 87.7% and 677 in Hawaii, 85.6% and 676 in Massachusetts and 85.6% and 679 in California.

Whether these changes constitute a trend towards maintaining long-term financial health, however, remains to be seen.

LendingTree has facilitated more than 30 million loan requests and $214 billion in closed-loan transactions. Data show since last year prospective borrowers have increased average credit scores by more than 10 points and have reduced average loan-to-value ratios by 1.6%,” improving the likelihood of qualifying for a home loan,” he said.

In addition, according to LendingTree, between 1Q 2013 and 2Q 2013, average credit scores for prospective borrowers increased in 41 states and average loan-to-value ratios for prospective borrowers declined in 43 states.