Americans Are Confident They Can Improve Their Credit
Four out of five Americans (81%) believe they can improve their credit, according to a recent study from Capital One.
The Capital One Credit Confidence Study, which surveyed 2,300 Americans, found that, while this optimism exists, consumers have an increased need for information about credit, as a number of credit myths still exist.
Key findings include:
- Americans are optimistic about their credit. More than half (53%) said they are “very confident” when it comes to understanding credit. 81% said they are confident they can improve their credit; 86% said they want to increase their score; 82% said they are willing to do whatever it takes to improve their score; and 76% said they know exactly what they need to do to better their credit.
- The majority of consumers (70%) understand that good credit is a key to unlocking the American Dream and are willing to make trade-offs to have excellent credit. 32% said they would rather have excellent credit than $1 million, and nearly 90% of 18 to 24 year-olds would opt for excellent credit over social media.
The study found there are a number of credit card myths that may hinder consumers when trying to build their credit:
- Nearly a third (31%) of respondents think closing unused cards is good for your credit when in fact, the average age of your accounts is an important part of your credit score. Thus, keeping old cards will help your score.
- Over half (53%) believe paying cell phone bills help credit, but on-time payments do not positively affect your score. However, missing telecommunications payments will show up negatively on a credit report, so it is important to pay these bills on time.
- 52% believe maintaining a balance is good for credit, but everyone should attempt to pay their credit card bill in full and on-time.
- 15% believe once a credit score is bad, it cannot be fixed, but scores can be improved if the consumer focuses on healthy credit habits, such as making payments on time.
- Nearly one third (29%) do not know there are multiple credit scoring models used by three different credit bureaus.
- 27% believe checking your credit report will hurt your score, which is not the case.
To dispel some of these myths and help consumers, Capital One created the CreditWise tool that allows everyone, not just Capital One customers, to discover their credit score and find ways to improve it.
“No two credit journeys are identical, and Capital One recognizes that people need to be empowered to make wise choices that make sense for their own situation when it comes to credit,” said Jennifer Jackson, Managing Vice President at Capital One. “We embarked on this national study to bring people’s journey to credit success to the forefront. Achieving better credit is core to everyone’s financial health, and this study revealed that there is a strong spirit of optimism; however, there is a need for more education and action for people to achieve credit success.”