While the vast majority of Americans understand a lot about credit scoring, millennials know less about these scores than other adult Americans. Perhaps millennials are too busy with video games and social media as opposed to obtaining the free credit reports on which their credit scores are based.
To help close the knowledge gap there is a free online credit score quiz available at www.creditscorequiz.org. To date, nearly 45,000 Americans have taken the quiz, which was developed and has been updated by CFA and VantageScore Solutions, displays no advertising, and collects no personal data. Everyone who completes the quiz in May will be given the opportunity to enter a drawing for a $500 gift card.
New research from our good friends at the Consumer Federation of America found:
Large Majority of Americans Know a Great Deal About Credit Scores
•Well over four-fifths know that credit card issuers (88%) and mortgage lenders (87%) might use these scores.
•Well over four-fifths know that missed payments (92%), personal bankruptcy (87%), and high credit card balances (87%) are factors used to calculate credit scores.
•Nearly three-quarters (72%) know that they have more than one generic credit score.
•Nearly three-quarters (72%) know that the three main credit bureaus – Experian, Equifax, and TransUnion – collect the information on which credit scores are most frequently based.
•Nearly three-quarters (72%) know that it is very important to check the accuracy of one’s credit reports at the three credit bureaus.
•Nearly three-quarters (74%) know that the Consumer Financial Protection Bureau is the federal agency best suited to help consumers solve individual problems.
Millennials Less Knowledgeable About Credit Scores Than Other Adults
On many questions, those 18-34 years of age scored significantly lower than other adults.
•When asked which of six types of businesses – ranging from credit card issuers to landlords to cell phone companies — might use credit scores, only 18 percent of millennials, but 32 percent of older consumers, correctly identified all six.
•Under half (47%) of millennials, but over 60 percent of those 45-64 years of age, know that age is not used in calculating credit scores.
•Less than two-thirds (65%) of millennials, but three-quarters (75%) of older adults, know that the three main credit bureaus collect information on which credit scores are based.
•Half (50%) of millennials, but nearly three-fifths (59%) of those 45-64 years of age, know that credit repair companies only occasionally or never are helpful in correcting credit report errors and improving credit scores.
Millennials, however, do not delude themselves. Only two-fifths (40%) think they have good or excellent knowledge about credit scores, whereas more than three-fifths (62%) of those 35 years and older think they have this knowledge.
Those Who Have Obtained Their Credit Reports More Knowledgeable Than Those Who Never Have
Those who have obtained their credit reports know more about credit scores than those who have not. These statistically significant differences exist for many knowledge questions, including which businesses use scores (31% who have obtained reports vs. 23% who have not), personal bankruptcy as a factor influencing scores (91% vs. 81%), the role of credit bureaus in collecting information on which scores are based (81% vs. 54%), each consumer having more than one generic score (76% vs. 66%), three ways to raise low credit scores (61% vs. 51%), the importance of checking credit reports (78% vs. 61%), and credit repair companies never or only occasionally being help.
The easiest way to obtain one’s reports is to visit www.annualcreditreport.com or call the toll-free number, 877-322-8228.