Credit Score Knowledge Gaps Large
Credit Score Knowledge Needs to be Taught in Schools
I’ve long been a proponent of teaching young adults how the credit scoring process works as part of their regular school curriculum. A recent survey of adult’s credit scoring knowledge conducted jointly by the Consumer Federation of America and Vantage Credit Scoring shows just how critical this need is. When I worked with a group of marketing students at a local community college they asked me to apply for a job at their school teaching credit repair. Said one: “They teach us so many useless things. Why not add something really useful to know like credit score knowledge?” Everyone knows there is such a thing as a credit score but few know how it actually works. Even fewer know that it changes often. Fewer than that know that it can be manipulated if you know what you’re doing.
Basic Credit Score Knowledge Missing for Many People
The only real positive finding of this survey is that 94 percent of people know that making payments on time is critical to a good credit score. At least the most basic requirement of good credit score knowledge is not lost on most people. Despite this bit of good news the survey revealed the following dismaying facts regarding the participant’s credit score knowledge.
- 40 percent of those surveyed did not understand that credit card issuers and mortgage bankers rely on credit scores to make decisions about loans.
- Another 40 percent thought that personal characteristics such as age and marital status were recorded on their credit scoring files.
- Over 30 percent were not aware of the requirement that they be informed of the credit score used if turned down for a mortgage, loan or if they don’t receive the best rate.
- 25 percent did not know key ways to raise or maintain a credit score such as keeping balances low on credit card and not applying for too much credit at once.
- 93 percent of those surveyed did not realize that several inquiries during the course of a 30 day window for mortgage or automobile loans are treated as only 1 inquiry.
- 40 percent did not realize that the credit score of a co-signer will be affected up or down by the performance of the primary borrower.
Ladies Choice Wins Credit Score Knowledge contest
Sorry Gentlemen but the Ladies scored significantly better in this survey than men. Women were less likely to think age and marital status were part of a credit file. Those who have obtained at least 1 credit report had more credit score knowledge than those who haven’t. People aged 18-34 did not have as much as much credit score knowledge as those between 35-44.