Quiz Results Suggest that Consumers Know Less about Credit Scores than in Past
The purpose of the quiz is to help people understand how to raise low scores and maintain high ones
The seventh annual credit score quiz released by the Consumer Federation of America (CFA) and VantageScore Solutions has revealed that consumers know less about credit scores today than they did last year.
Changes in Knowledge
One example of a change in consumer knowledge is the number of survey respondents who know that non-credit-related service providers use credit scores in calculating prices. In April 2016, 68 percent of consumers knew that cell phone companies use credit scores in this way and 53 percent knew that electric utility companies do. In June 2017, 59 percent knew this fact about cell phone companies and 44 percent about electric companies.
On the other hand, more people are requesting at least one credit score every year: 49 percent obtained a score in 2014, 51 percent in 2015, 54 percent in 2016, and 56 percent in 2017.
Most people were able to correctly major factors that affect credit scores: 91 percent knew that missed loan payments count, 86 percent knew about high credit card balances, and 85 percent knew about personal bankruptcy. In addition, 96 percent knew that paying off loans on time would help improve low scores or maintain high ones, and 80 percent were aware that keeping their credit card balances low would help.
Other items that consumers were less aware of included:
- A low credit score for a typical auto loan would raise loan charges by more than $5,000—a decrease from 25 percent to 18 percent
- Credit scores represent a consumer's risk of not repaying a loan—a decrease from 43 percent to 38 percent
- Individual consumers have more than one score—a fall from 69 percent to 64 percent
- The importance of checking the accuracy of credit reports at the three major credit bureaus—a decrease from 73 percent to 68 percent
- Credit repair companies are rarely, if ever, helpful in raising a consumer's scores—a fall from 54 percent to 47 percent
The survey of 1,000 adults also suggested other facts. For example, while more male respondents (61 percent) believed that their knowledge of credit scores was good or excellent than female respondents (54 percent), women actually knew more about many factors.
However, the biggest difference between respondents when it came to credit score knowledge reflected income, not gender. The difference in correct responses was more than 10 percentage points for many questions. For instance, when asked to identify three methods for improving a low credit score, only 55 percent of respondents with household incomes under $25,000 were correct, while 73 percent of those whose incomes were $100,000 and more identified the correct methods.
How Consumers Can Improve Their Credit Scores
Here are several steps that consumers can take to raise their credit scores:
- Make loan payments on time, every time.
- Use only a small percentage of the credit available on credit cards: the more credit is used, the lower credit scores become.
- Instead of shifting credit card debt to another card or to a home equity loan, pay it down on the original card.
- Check credit reports for mistakes on a regular basis.
To check how much you know about credit scores, take the quiz.