Link Between Credit and Mortgages: Not What You Think

SpiffyJ | E+ | Getty Images

As good as your credit score is—or isn't—do you ever wonder what the competition looks like?

Mortgage, a mortgage shopping website, recently pulled data from almost half a million online mortgage applicants from across the country. For consumers applying for 30-year and 15-year mortgages, the site came up with an average credit score.

The good news: since the site ran a similar tabulation in 2011, credit scores from online mortgage shoppers have increased by four points, to 734. That small bump is an indication of how the real estate crisis has slowly resolved itself, and how the average household debt load has improved overall.

The figures paint an interesting portrait of who's borrowing, what their credit scores are, and how much they bring home — and the results are literally all over the map. California is ranked highest, with an average credit score of 744 and an even higher median score of 774 — meaning that half of all applicants in the state had a credit score higher than 774 (out of a possible 850).

(Read more: What to Expect from Interest Rates This Year)

Next comes Hawaii, with an average score of 754, Oregon at 751 and Connecticut at 747. On the list of median scores (see chart below), Wisconsin edges Connecticut for fourth place.

Check out the bottom of the list, where Mississippi, Arkansas and Louisiana reside, and you begin to see a pattern. All the states with top scores are those with high household earnings, while those with the lowest scores correlate with the lowest incomes.

2012 Median Credit Score by State

State Median Score
California 774
Hawaii 771
Oregon 771
Wisconsin 766
Connecticut 765
Delaware 764
Washington 764
Colorado 763
Rhode Island 763
New Hampshire 762
Virginia 762
Maryland 761
Massachusetts 760
North Carolina 760
Vermont 760
Minnesota 759
New Jersey 759
Arizona 758
Kansas 758
Utah 758
South Dakota 756
Montana 754
New York 752
Maine 751
Nevada 751
New Mexico 751
North Dakota 751
Florida 749
Georgia 749
Illinois 749
Nebraska 748
Idaho 747
Missouri 746
Indiana 745
Pennsylvania 745
Iowa 744
Ohio 741
Alabama 738
South Carolina 737
Tennessee 732
Texas 732
Kentucky 731
Michigan 731
Wyoming 728
West Virginia 720
Alaska 717
Oklahoma 716
Louisiana 714
Mississippi 698
Arkansas 691
Median 754

Yet some of the results are not exactly what one might expect. Mississippi, with a household income in the low $40,000s, has a higher median credit score on Mortgage Marvel's list than the national average of 684.

Rick Allen, COO of Mortgage Marvel, cautions that there's a story underlying the data that might not be obvious to the naked eye.

"There's a little bit of self-selection going on here," said Allen. "The people with not-as-good scores don't apply, because they think without stellar credit they won't qualify."

Indeed, while income is a good indicator of where credit scores will end up, the price of real-estate seems to determine who applies, and how good their credit is.

This is especially true of places at the upper end of Mortgage Marvel's list. While Maryland regularly ranks as the top state for personal income, the state doesn't make the top ten in the best credit scores for mortgage applicants. That is because Maryland ranks out of the top third for states with the highest average listing price, according to

California and Hawaii are both ranked among the top four states for average home price.

(Read more: Renting Beats Owning, But Both Take a Bigger Slice)

Those applicants with scores in the mid-700s, said Allen, "are people who can afford a $500,000 home."

At the bottom of list, income is more of a determinant. In the middle, each one seems to have its story to tell.

South Dakota, number 36 on Trulia's list for average listing price, ranks at 24 for average credit score. The result, as Allen pointed out, is due to incomes inflated by the upper Midwest energy boom.