Americans Not Taking Advantage of Free Credit Reports
Even though many Americans understand the importance of good credit, most are not taking advantage of their free annual credit report, which is a key part of maintaining or improving credit.
According to Equifax’s 2016 Personal Solutions Group Financial Literacy Month Survey, 81% of Americans are aware they can get a free credit report every year, but more than 40% are not doing so. 16% have not checked their report within the past year, 14% have never checked their reports and 12% could not remember when they last accessed their report.
The survey also found that many do not understand how their credit worthiness is determined. For example, only 40% know that negative information stays on credit reports for seven years.
Respondents also seemed confused as to what qualifies as negative information. They were given a number of accurate and inaccurate statements and were asked to say whether those things affected credit. Respondents were able to identify that these were accurate statements:
- How much you owe on credit cards and other loans (83%)
- Opening new credit accounts (68%)
- Length of credit (64%)
- Types of credit or loans (60%)
However, some believed these inaccurate statements were also true:
- Being denied credit (56%)
- Interest rate on credit cards or other loans (30%)
- Checking your credit report (30%)
Unfortunately, poor credit is holding many Americans back. The respondents said bad credit has prevented them from getting a lower interest rate on a loan (19%), renting an apartment (7%), turning on utilities (5%) or getting a job (4%).
There is some good news. While consumers are not necessarily reviewing their full credit report, many are monitoring their score. Only 27% said they do not check their score. For those that do:
- 32% receive it for free from a third-party website
- 25% get it from their credit card company and 14% get their score from their bank
- 4% pay for their score from a credit bureau and 3% pay a third-party website
- 1% used some other source
Atlanta-based Equifax surveyed 1,008 consumers earlier this month.