Where Americans Are Actually Paying Down Debt: A State-by-State Breakdown

While national consumer debt hit $18.33 trillion in June 2025—a 3.2% jump from the previous year—surprising pockets of financial resilience emerged across the country. Despite persistent inflation and elevated interest rates, 32 states bucked the trend by reducing household borrowing. Understanding these regional patterns reveals important lessons about managing debt and maintaining a healthy 709 credit score or better.

The Debt Reduction Story Across America

The broader narrative around consumer debt tells of households struggling under the weight of mortgages, credit cards, auto loans, and home equity lines of credit. Yet the numbers tell a more nuanced story. While Americans collectively owed $17.76 trillion in June 2024, growing to $18.33 trillion by June 2025, not every region participated equally in this expansion. In fact, nearly two-thirds of states managed to reduce average consumer debt per household.

According to recent Experian data, the District of Columbia led all regions with a significant 4.1% reduction in average consumer debt, declining from $163,598 in 2024 to $156,868 in 2025—a decrease of $6,730 per consumer. This substantial improvement suggests targeted financial recovery in the nation’s capital.

High-Impact Debt Reductions: The Top Performers

Beyond the District of Columbia, Louisiana and Oklahoma emerged as standout performers in debt reduction. Louisiana saw average consumer debt drop by $1,689 (2.1%) from $79,557 to $77,868, while Oklahoma achieved a 1.9% decline, lowering per-capita debt from $74,622 to $73,192. These improvements matter significantly for residents working to strengthen their 709 credit score and overall financial position.

Maryland’s households reduced debt by $2,165 annually (1.7%), moving from $131,163 to $128,998. North Dakota followed closely, decreasing by $1,360 (1.5%) to reach $90,555 from $91,915. These mid-tier reductions, while modest in percentage terms, represent meaningful progress for thousands of families.

The Middle Tier: Consistent Debt Reduction Across Diverse States

Illinois, Michigan, and Pennsylvania—representing different economic regions—all achieved notable debt reductions between 1.3% and 1.4%. Illinois households decreased debt by $1,217 to $87,090, Michigan by $975 to $76,414, and Pennsylvania by $1,137 to $83,483. These reductions span industrial heartland states with varying demographic profiles, suggesting broader economic factors supported improved financial management.

Mississippi, the lowest-debt state in this cohort, reduced per-capita borrowing by $709 (1.1%), declining from $64,950 to $64,241—an especially important achievement for lower-income households working to maintain or improve their 709 credit score.

New Jersey and New York, both expensive housing markets, showed modest declines of 0.9%, with per-capita debt dropping by approximately $1,000 and $838 respectively. These high-cost states saw average consumer debt settle at $109,831 and $93,760.

Smaller Declines, Consistent Progress: The Final 20 States

Another substantial group of states achieved debt reductions ranging from 0.3% to 0.7%, reflecting steady if incremental progress. Connecticut, Colorado, and Massachusetts—typically high-debt states—still managed meaningful annual decreases. Connecticut reduced debt by $795 to $110,272, Colorado by $893 to $155,204, and Massachusetts by $745 to $130,772.

Alaska, Virginia, and Delaware each achieved reductions between 0.4% and 0.5%, while Wisconsin, California, Hawaii, Iowa, Indiana, Kansas, and West Virginia all decreased debt by 0.2% to 0.3%. Though percentages seemed small, these declines represent collective household savings and reduced financial stress.

What This Means for Your Financial Health

These state-level improvements carry important implications for consumers managing their financial profiles, including their 709 credit score and debt levels. States achieving meaningful reductions likely benefited from combination factors: wage growth in specific sectors, reduced reliance on high-interest credit, strategic paydown of mortgage principal, or improved employment stability.

The diversity of states achieving debt reduction—from high-cost housing markets to agricultural regions, from densely populated metros to rural areas—suggests that financial recovery isn’t limited to specific economic zones. Households nationwide found ways to manage borrowing more effectively despite macroeconomic headwinds.

The Broader Context: Regional Variations Matter

The contrast between states reducing debt and the national trend of rising consumer debt underscores an important reality: aggregated national statistics can mask significant regional variation. As households evaluate their financial strategies and work toward maintaining a healthy 709 credit score or higher, understanding state-level economic conditions provides valuable context.

The states leading debt reduction offer lessons for others: consistent financial discipline, potentially supported by local economic strength or demographic shifts toward younger, higher-earning households, creates measurable improvement. For individual consumers, these trends reinforce the value of prioritizing debt paydown while protecting credit scores and building long-term financial resilience.