Millions of Consumers Confused by Free Credit Scores
More than 50 million Americans now have access to free credit scores, according to the Consumer Financial Protection Bureau. But many of these consumers have no clue how to interpret them or what to do with the scores once they see them.
Last year, the CFPB urged credit card companies to provide free credit scores to their customers so they would be more inclined to review their credit reports and make positive changes in their financial habits. Companies like Discover, Barclaycard, Pentagon Federal and Citibank have followed through with that idea, giving 50 million consumers access to free credit scores on their account statements or online each month.
Despite the fact that many consumers now have access to their credit scores, a large portion of them are confused about what to do with them. The CFPB worked with focus groups and found people do not know how to review their credit reports and improve their scores, even if they can see their scores for free.
“Access to these scores provides an opportunity to engage consumers around their credit reports,” said CFPB Director Richard Cordray. “Once consumers see their credit scores, they can be motivated to learn more about their credit history, check their full credit report, and take action to improve their financial lives.”
So far, that does not appear to be happening.
Consumers who felt “financially savvy” were more likely to monitor their credit reports regularly. Consumers who remain confused about their credit reports and credit scores are encouraged to learn more about the reporting process and how their scores are calculated. The CFPB is also working with credit reporting agencies to make scores and reports easier to interpret for the uneducated consumer.