Latest
Recommended
Published: Thu, July 13, 2017
Economy | By Melissa Porter

What Consumers Don’t Know about Credit Scores

What Consumers Don’t Know about Credit Scores

Credit scores can have a significant impact on the lives of Americans. Yet, if they are asked questions about their credit scores, there is a good chance they will come up with the wrong answers. According to a survey conducted by the Consumer Federation of America and VantageScore Solutions, only about 44 percent of consumers were aware that electric utilities companies look at credit scores to decide whether or not to accept new customers and determine prices, a nine-percent drop from a year ago. Also, only 59 percent of consumers knew that mobile phone companies check credit information, compared to 68 percent in 2016.

This lack of knowledge is somewhat surprising, considering that more and more consumers are checking their credit reports. The survey also found that 56 percent of consumers obtained one or more credit reports in the past year, a two-percent increase from 2016.

 

Why are American Consumers Confused about Credit Scores?

It is not entirely the fault of consumers that they find credit scores confusing. The main credit bureaus have been criticized for providing unclear information. In March, the Consumer Financial Protection Bureau fined Experian $3 million for giving consumers deceptive information about the use of their credit scores. This fine, plus another $20-million one involving Equifax and TransUnion in January, revealed some eye-opening information for consumers who are trying to get a loan or improve their credit scores. From 2012 to 2014, the credit bureaus informed consumers that the credit scores they were selling were similar to the scores used by lenders to determine their creditworthiness. However, in some cases, lenders used scores that were significantly different from the scores they provided.

Importance of Checking and Improving Credit Scores

Failure to keep track of your credit score or having bad credit can be costly. As such, you should check your credit score regularly either through a credit bureau, credit card company, or bank, so that you will know where you stand. The most effective ways to improve your credit score are paying your bills on time and paying down your debt. According to Moneybanker, bad credit can make it harder for you to get approval for a loan, but it is possible to find lenders with more lenient requirements. 

Having good credit can be beneficial to you in many ways, from easy loan approval to better interest rates. Make a point to pay close attention to your credit score.

Like this: