July 21, 2025

Texas Ranks Highest in Financial Distress in the U.S.

News Summary

A recent WalletHub report reveals that Texas leads the nation in financial distress, with significant numbers of residents facing credit issues, rising bankruptcy filings, and a low average credit score. Major cities like Houston and Dallas are among the most affected. Contributing factors include inflation and political influences, indicating a need for both community and policy-driven solutions. The current situation calls for urgent action to support those grappling with financial challenges across the Lone Star State.

Texas Tops WalletHub’s 2025 Financial Distress Ranking Amidst Economic Struggles

Texas has been identified as the state experiencing the highest level of financial distress in the United States, as per a report released by WalletHub on July 16, 2025. This alarming rating highlights the growing challenges many residents of the Lone Star State are facing regarding their financial health, despite Texas boasting the eighth-largest economy in the world.

According to WalletHub, financial distress refers to circumstances where individuals have a credit account suffering from forbearance or are deferring payments due to financial hardships. The report reveals that Texas has the most significant number of residents going through financial difficulties nationally, with a reported 7.1% of people holding distressed accounts, ranking it seventh overall in the country.

Moreover, data from the first quarter of 2025 indicates that Texas residents possess the ninth-lowest average credit score nationwide. This troubling statistic underscores the financial struggles faced by many citizens. Additionally, Texas witnessed a substantial 22% surge in non-business bankruptcy filings from December 2023 to December 2024—markedly the sixth-highest increase across the nation.

Supporting Data Highlights

WalletHub’s detailed analysis considered nine different metrics across all 50 states, measuring factors such as average credit scores, bankruptcy filings, and residents with accounts in distress. A particularly concerning statistic revealed that Texas ranks third for the number of accounts in forbearance or with deferred payments on a per-person basis. Key cities in Texas, including Houston, Dallas, and San Antonio, have all been included in the list of the top 10 U.S. cities experiencing the most financial distress. Furthermore, Texas has consistently exhibited high Google search interest in terms related to “debt” and “loans,” illuminating a pressing need for financial assistance among its inhabitants.

Contributing Factors to Financial Strain

Several factors contribute to the financial strain on Texas residents. Rising inflation rates alongside significant layoffs linked to shifts in government spending have intensified the economic pressures faced by many families. Additionally, the reduced access to healthcare for low-income individuals further exacerbates the financial difficulties that countless Texians are grappling with.

The report also touches upon political patterns, revealing that states led by Republican leadership, such as Texas, experience higher rates of financial distress in comparison to their Democratic counterparts. For context, California, with a population exceeding three million more than Texas, reported a much lower 5.1% of its residents facing accounts in distress.

Additional Context on Financial Distress Rankings

The WalletHub report highlights that Texas is not alone in this financial predicament, as other Southern and Central states also face similar financial challenges. Following Texas, Florida ranked second, Louisiana third, Nevada fourth, and South Carolina fifth in terms of financial distress. These rankings indicate a troubling trend affecting several states within the region, with many residents feeling the brunt of rising economic pressures.

WalletHub analyst Chip Lupo remarked on the relevance of the metrics they analyzed, as they provide significant insights into the economic climate and financial well-being of the state’s residents. Understanding these metrics is crucial for assessing the overall economic trends impacting Texas and its inhabitants.

In light of this report, the financial landscape in Texas calls for immediate attention and action as policymakers and stakeholders strive to address the root causes of financial distress and support residents in navigating their economic challenges.

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Author: STAFF HERE COLLEGE WRITER

The COLLEGE STATION STAFF WRITER represents the experienced team at HERECollegeStation.com, your go-to source for actionable local news and information in College Station, Brazos County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Brazos Valley Fair & Rodeo, Chilifest, and Aggie Muster. Our coverage extends to key organizations like the Bryan-College Station Chamber of Commerce and United Way of the Brazos Valley, plus leading businesses in education, biotechnology, and retail that power the local economy such as Texas A&M University, Fujifilm Diosynth Biotechnologies, and H-E-B. As part of the broader HERE network, including HEREAustinTX.com, HEREDallas.com, HEREHouston.com, and HERESanAntonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.

STAFF HERE COLLEGE WRITER

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