Survey Says: Americans Lack Credit Score Knowledge

Consumer Federation of America report reveals our credit shortcomings.

May 24, 2013

A consumer survey from the Consumer Federation of America (CFA) and VantageScore Solutions reveals that a large number of Americans know little about credit scores: One-quarter to two-fifths of those surveyed incorrectly answered wide-ranging questions about these scores.

For instance:

Two-fifths didn’t know credit card issuers (40%) and mortgage lenders (42%) use credit scores in decisions about credit availability and pricing;

Two-fifths incorrectly believe personal characteristics such as age (43%) and marital status (40%) are used in calculating credit scores;

One-quarter to one-third don’t know when lenders are required to inform borrowers of the credit score used in their lending decision—after consumers apply for a mortgage (27%), when they’re turned down for a loan (24%), and when they don’t receive the best price or other terms (35%);

One-third to two-fifths don’t know that the credit scores of co-signers of a student loan are affected by that loan, improving if payments are made on time (38%) and declining with one late payment (31%);

More than one quarter don’t know how to raise or maintain their scores, such as keeping credit card balances low (26%) and not applying for several cards at the same time (28%); and

More than one-third (36%) incorrectly believe credit repair agencies are always or usually helpful in correcting credit report errors and improving scores.

“Credit scores have become so influential in the lives of most consumers that tens of millions are severely disadvantaged by their lack of knowledge about these scores,” says Stephen Brobeck, CFA’s executive director.

CFA and VantageScore Solutions offer an interactive quiz, including a Spanish version, to educate consumers.

Nearly all survey respondents (94%) knew that making loan payments on time boosts a credit score. But all but 7% knew that making several inquiries about getting a consumer or mortgage loan in a one- to two-week window will won’t lower their credit scores.

Other findings:

Women know more about credit scores than men. Far fewer women incorrectly believe age (38% vs. 48%) and marital status (34% vs. 46%) are used in calculating credit scores. And far more women understand that credit bureaus collect the information for scores (74% vs. 68%), know what a good score is (36% vs. 29%), know when scores are free (65% vs. 60%), know when lenders are required to disclose scores (53% vs. 46%), and understand the importance of checking credit reports (77% vs. 72%).

Men are, correctly, more skeptical about the value of credit repair agencies: Only 32% believe these agencies always or usually are helpful, compared to 40% percent of women.

On the whole, adults between the ages of 18 and 34 know as much about credit scores as the rest of the adult population, although those between the ages of 35 and 44 know more.