America's financial distress: Texas ranks number one on the list among states; falling credit score, borrowings surge

While financial hardship affects many across the US, Texas ranks as the number one state struggling the most financially, according to a new WalletHub report .

WalletHub conducted a comparison of all 50 US states to identify where residents are experiencing the most financial distress. The analysis considered nine metrics across six key categories, including average credit scores, the percentage of individuals with “accounts in distress” (such as those in forbearance or with deferred payments), the year-over-year change in bankruptcy filings from March 2024, and online search trends for terms like “debt” and “loans.”

Texas, being ranked the most financially distressed state in 2025, may come as a surprise, given that the state boasts a gross domestic product (GDP) larger than that of many countries and continues to have one of the top 10 strongest state economies in the US. Its rank, however, has declined compared to previous years.

Despite the state’s strong economy, many Texans are facing serious financial strain in 2025. The study revealed that Texas had the ninth-lowest average credit score in the country in the first quarter of the year.

Additionally, the state saw the sixth-largest rise in personal (non-business) bankruptcy filings over the past year, with a 22 percent increase.

The report also highlighted that Texas ranked third in the number of accounts per person in forbearance or with deferred payments, and had the seventh-highest percentage of residents with distressed accounts overall, at 7.1 percent.

This is the standing of Texas on key indicators of the study, where being first is equivalent to being most distressed.

• No. 5 – "Loans" search interest index rank
• No. 6 – Change in bankruptcy filings from March 2024 to March 2025 rank
  
• No. 7 – Average number of accounts in distress rank
  
• No. 8 – People with accounts in distress rank
  
• No. 13 – Credit score rank and “debt” search interest index rank
  

This also pointed to a trend that Texans were frequently searching for terms like “debt” and “loans,” which WalletHub says signals a strong urgency to borrow money, even though many residents are already in debt.

Analysing financial stress at the state level is crucial for understanding how Americans are coping with broader economic challenges such as inflation, unemployment, and natural disasters, according to WalletHub analyst Chip Lupo.

“When you look at delayed payments alongside factors like bankruptcy rates and shifts in credit scores, it gives a clear view of a state’s overall financial health,” Lupo said.

The other end of the list includes states like Hawaii (No. 50), Vermont (No. 49), and Alaska (No.48), as the least financially distressed states in America.

The top 10 states with the most people in financial distress in 2025 are:

No. 1 – Texas
No. 2 – Florida
No. 3 – Louisiana
No. 4 – Nevada
No. 5 – South Carolina
No. 6 – Oklahoma
No. 7 – North Carolina
No. 8 – Mississippi
No. 9 – Kentucky
No. 10 – Alabama