Several Texas cities rank among the highest in the U.S. for debt collection, according to a new study by personal finance website WalletHub.
Debt collection accounts — considered an indicator of financial struggles — allow original lenders to recover some money by selling unpaid debt to a collection agency. Debt collection can devastate credit scores, remaining on a credit report for up to seven years.
Texas fares particularly poorly in the study.
Laredo ranked No. 1 in the country for the number of collection accounts, followed by Corpus Christi at No. 2. Plano and Irving rank Nos. 4 and 5, with Austin at No. 8 and Dallas No. 9. Other Texas cities in the top 20 are Houston at No. 11, Fort Worth at No. 14, San Antonio at No. 15, Garland at No. 17, and Arlington at No. 19.
Texas has 11 cities in the top 20. By comparison, California has only three cities in the top 20.
To determine the rankings, WalletHub compared 100 cities across several measures, including average number of collection accounts, average balance and change in those values between this year’s first and second quarters.
The study found the average number of collection accounts per Dallas resident is 3.15, with an average balance per account of nearly $1,600. Meanwhile, the average number of accounts per Irving resident is 3.27, with an average balance of more than $1,600.
Roughly a quarter of Americans have debt collections on their credit report, according to the nonprofit Urban Institute. The largest debt burden falls on families of color, who historically have experienced exclusionary and predatory lending practices.
Other studies have found Texans are struggling with credit card debt. A 2023 Forbes study said Texas has the 11th-highest credit card debt as a percentage of income. It also had the fourth-highest delinquency rate at 11.19% in the fourth quarter of last year.
A WalletHub study in June also found Plano has one of the highest rates of credit card debt, at $17,410 per household. Dallas was not far behind, at $16,105 per household.