Economic Struggles In Kentucky: What’s Behind the Numbers?

WalletHub recently released a report shedding light on many Americans' financial struggles. Kentucky ranks 4th overall in financial distress, indicating that the state is among the most affected by economic struggles. Here are the key factors contributing to this ranking. There's significant work needed to improve the economic well-being of Kentucky residents.

STATES WITH THE MOST PEOPLE IN FINANCIAL DISTRESS

The report highlights the states experiencing the most significant levels of financial distress, offering insights into where these challenges are most pronounced. Factors such as late or missed credit payments, high levels of debt, low credit scores, and unemployment rates all contribute to financial strain. The findings emphasize the growing economic challenges across the U.S., where rising costs, inflation, and uncertainty have made it increasingly difficult for many individuals to stay on top of their financial obligations.

“Millions of Americans are having trouble making payments on their debts, which can lead to unsustainable interest, fees, and credit score damage. The best strategies for getting current on your debt include strict budgeting that cuts your spending, transferring the balance to a new bank with a lower interest rate, and working out a debt management plan with your creditor.”, Chip Lupo, WalletHub Analyst

KENTUCKY: STATE WITH THE 4TH MOST FINANCIAL DISTRESS

While residents of Texas, Louisiana, and Nevada face the most severe financial distress, people in Kentucky are also among the top states struggling with significant financial challenges. Kentucky's ranking in the upper tier reflects the widespread issues of financial instability, including rising levels of debt, poor credit scores, and increasing difficulty in managing credit accounts. The state’s residents feel the pressures of economic hardship, compounded by a rising cost of living and limited financial resources. This highlights the need for targeted interventions and support to help alleviate the financial burdens of Kentuckians and improve their overall economic health.

Kentucky Overall Ranking: 4th
4th – Average Credit Score (Q3 2024)
10th – Change in the Share of People with Accounts in Distress - Q3 2024 vs. Q3 2023
9th – Change in the Average Number of Accounts in Distress - Q3 2024 vs. Q3 2023
13th – “Loans” Search Interest Index

STATE-BY-STATE FINDINGS

REPORTING METHODOLOGY

To determine which states are experiencing the most financial distress, WalletHub conducted a comprehensive analysis by comparing the 50 states across nine key metrics, grouped into six overall categories. These categories include:

Credit Score: The average credit score of residents in each state, which is a critical indicator of financial health.

People with Accounts in Distress: The percentage of individuals in each state who have at least one credit account either in forbearance or have payments deferred.

Average Number of Accounts in Distress: The average number of credit accounts in distress per person in each state.

Change in Number of Bankruptcy Filings (September 2024 vs. September 2023): The increase or decrease in bankruptcy filings, reflecting broader financial trends.

“Debt” Search Interest Index: A measure of how often people in each state are searching for information related to debt, indicating concern over financial obligations.

“Loans” Search Interest Index: A similar index, reflecting how often people search for loan-related information, which may suggest an attempt to secure financing due to financial distress.

WalletHub then calculated a weighted average across all these metrics to determine an overall score for each state. The states were ranked based on these scores, highlighting those where financial difficulties are most pronounced.