Large Portion of Americans Are Clueless about Credit Scores
A recent survey shows that a large portion of Americans have very little idea how their credit scores are determined. Some key findings from the study, issued by the Consumer Federation of America and VantageScore Solutions, include:
- 40% of those surveyed did not know credit card issuers use their credit scores to determine credit limits and pricing
- 43% believe that age is used as a factor in calculating credit scores
- 40% believe that marital status is used as a factor in calculating credit scores
- 31% did not know that a cosigner’s credit score can decline with a late payment
- 26% did not know that keeping credit card balances low could improve their credit scores
“Misperceptions about credit scores are extremely concerning,” said Barrett Burns, President and CEO of VantageScore Solutions. “People who fail to understand exactly what can impact their score have little incentive to manage the real things that truly do make a difference.”
One question that nearly all (94%) of the 1022 adults surveyed got right was that making loan payments on time would improve their credit scores. On the other hand, only 7% of those surveyed knew that making multiple inquiries for a loan within a 1-2 week window will not have a negative impact on their scores. Credit bureaus encourage consumers to do this to ensure they get the lowest rates possible.
The CFA and VantageScore Solutions offer a free quiz online to test your credit score IQ.