Credit Knowledge Grows But Misconceptions Continue
Do you know what your credit score is or how it’s calculated? If you’re part of a growing trend, the answer may be “yes.” According to a new survey by the Consumer Federation of America (CFA) along with VantageScore Solutions, a rising number of Americans have recently checked their credit. Additionally those who have kept up with their credit scores were found to have enhanced knowledge of various credit-related topics.
First, over the past four years, credit-checking Americans have grown to become the majority. While only 49% of adults in 2014 reported obtaining their credit scores in the year prior, the latest survey found that faction increasing to 57%. It was also discovered that those looking to take out a loan were more likely to know their credit score than those with no borrowing plans. Among potential borrowers, the percentage of those who had recently checked their credit climbed to 70%.
Elsewhere in the survey it was revealed that the 57% who had recently checked their credit had a better knowledge of what impacted their scores than those who hadn’t. For example 94% of those had obtained their scores knew that credit card issuers utilized credit scores in their approval decisions compared to 76% of those who didn’t obtain their scores. Additionally 94% of obtainers knew that missed payments lowered credit scores while only 80% of non-obtainers realized that. In one of the largest discrepancies, 80% of credit checkers were aware that they had more than one credit score, which only 53% of others knew.
Speaking on the survey findings, CFA executive director Steve Brobeck said, “The rising percentage of consumers who have obtained their credit scores is encouraging because those who have accessed their scores know much more than those who have not.” He added, “It is also encouraging that those who plan to borrow are more likely to have obtained their credit scores and know more about scores than non-borrowers.” However, although knowledge of credit topics increased overall, the study also found some persistent misconceptions that consumers have.
Although a minority of those surveyed believed that their age was a factor in determining their credit score, the 41% of respondents affirming the myth is still a significant number. Similarly 38% believed that marital status played a role in calculating credit scores. Meanwhile 64% incorrectly believed tax liens were considered in credit scores — however the rule that removed tax liens from credit reports was only recently changed.
With a number of credit resources now available to consumers — including Credit Karma, Credit Sesame, WalletHub, and others — it makes sense that more Americans are now checking their credit scores than previously had. Still it’s always encouraging to see consumers increasing their financial competency in such a significant way. Hopefully this is a trend that will continue and raise the average credit score even higher.