5 Things Too Many of Us Don't Know About Credit Scores
NEW YORK (TheStreet) -- Almost half of Americans don't know their own credit score, which in the eyes of consumer advocates is roughly akin to not knowing your own Social Security number or cellphone number.
A study last year of 2,215 consumers by CoupinCabin.com reveals that 47% of U.S. adults can't pin down their credit score, with 60% of Americans aged 18-34 in the dark on the No. 1 benchmark used by creditors and lenders to judge your financial health.
But that's not the half of it. U.S. consumers are lacking basic financial credit knowledge on a wide range of categories that can hurt them on such key issues as taking out a student loan, getting a credit card or buying a home mortgage.
VantageScore, a Stamford, Conn., credit scoring model company, canvassed 1,000 U.S. adults that measured their knowledge of credit scores on a wide range of topics. (The Consumer Federation of America co-sponsored the survey.)The results are depressing for a consumer base that needs to know all it can about credit scores and how credit rating agencies calculate their financial risk for creditors.
According to VantageScore:
- 38% of credit card users and 40% of mortgage customers didn't know that credit card firms and mortgage lenders use credit scores to make lending decisions.
- About 40% of respondents think that their age and marital status are factors weighed by lenders in making credit decisions.
- Up to 40% of consumers don't know that co-signing a college loan can hurt the co-signee's credit score. Even one late payment can weaken your credit score, VantageScore reports.
- Up to 35% of Americans don't know that lenders are required to tell them if a request for credit has been turned down, and what credit score determinations were used in the decision.
- About 26% of U.S. consumers don't know that keeping credit card balances low improves credit scores. And 28% aren't aware that applying for multiple credit cards also helps their credit.
The VantageScore/CFA survey isn't a pretty one for consumers, but there is hope. The companies have come up with a quiz designed to improve consumer knowledge on credit.Find it here or here.
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