California no longer has the worst credit of any state, as its economy and finances continue to mend.

Standard & Poor's Ratings Services on Thursday upgraded its rating on California's general-obligation bonds to A from A-. The agency cited for the upgrade California's improving economy, a balanced budget and a plan from Democratic Gov. Jerry Brown to pay down debt in coming years.

Now, Illinois holds the lowest rating in the U.S. S&P on Friday dropped that state's rating to A- from A, citing a "poor track record" in addressing its pension crisis. Abdon Pallasch, assistant budget director for Illinois, said in an email on Thursday that the state delayed a bond sale scheduled for Wednesday as "the market is unsettled because of recent actions and comments by the bond rating agencies."

California, which still has the second-lowest rating, "has made some pretty significant structural progress on its fiscal imbalance and reduced its spending," said S&P analyst Gabriel Petek. He added that higher revenue, which was bolstered by a temporary tax increase approved by voters in November, also helped.

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