Consumers Use Credit Score Knowledge To Improve Their Creditworthiness
They say knowledge is power. And in the case of credit scores, it seems to be true.
A recent survey by the Consumer Federation of America (CFA) and VantageScore Solutions, LLC, found that people who had recently gained access to their credit score knew more about how credit scores are calculated than those who are unaware of their scores.
Folks who have less-than-perfect credit, especially, can benefit from requesting their credit scores, along with copies of their credit reports. Knowing what goes into a credit score is the first step toward repairing bad or limited credit, or establishing good credit in the first place, if you have no credit history.
It’s easier than ever to get a copy of your credit report and keep track of your credit score these days, thanks to new transparency and free access to credit scores through credit bureaus and issuers. This might be why more consumers are obtaining their credit scores over the past few years; the survey showed that 57 percent of respondents had accessed their credit score in the last year, compared with 49 percent in 2014.
Steve Brobeck, executive director of CFA, said the survey’s results were heartening. “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.”
Confusion over what matters
Although a majority of consumers who took a quiz about credit scores were able to correctly identify the major factors that are used to calculate credit scores (missed payments, high credit card balances, bankruptcy, etc.), many of them did not have a good grasp of what those factors mean.
Forty-one percent of those surveyed thought that age mattered when calculating credit scores; it does not. And 38 percent incorrectly thought than marital status was a key factor in their credit report. Other common misunderstandings included thinking that tax liens or civil judgments made a difference to credit scores, which they do not.
Most respondents, however, knew that making loan payments on time, keeping balances under 25 percent of available credit, and not opening multiple accounts at the same time were all good ways of improving credit.
The survey was conducted by phone from May 31 to June 3, 2018, and included responses from 1,005 American adults.