The Consumer Federation of America and VantageScore Solutions reported that a recent survey they jointly sponsored found consumers have better understandings of credit scores, but still lack good knowledge of credit score impacts.
VantageScore Solutions is the Stamford, Conn.-based consumer data firm whose VantageScores work in cooperation with the consumer credit scoring systems developed by Experian, TransUnion and Equifax.
The survey, which is the fifth the companies have sponsored together, found that a higher percentage of Americans understand that making loan payments on time, using a credit card occasionally but keeping low balances and avoiding opening several credit accounts at the same time will raise a low credit score or maintain a higher one.
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But the survey also found that only 20% of respondents understand that a low credit score can increase the finance charges on a $20,000 car note by more than $5,000, and 41% believed finance charges on that car note would increase by less than $3000.
ORC International conducted the survey from April 9 to 12 of 2015 and questioned a representative sample of 1000 adults both by landline and mobile phone. The survey results had a margin of error of plus/minus three percentage points, the companies said.
Small numbers of respondents correctly listed the numbers of financial service providers that use credit scores and more respondents knew that age, ethnicity and marital status are not used to calculate credit scores.
Further, the survey found that consumers who had obtained their credit score were much more likely to know more about them.
"Low credit scores can deny one access to credit or increase the costs of this credit by thousands of dollars," Stephen Brobeck, CFA's executive director, said. "These higher costs can often be avoided simply by making loan payments on time or by deferring purchases until loan payments are manageable."
"We know that if consumers are educated about credit scoring, they will feel empowered and are more likely to improve their score. Our online knowledge quiz website is a powerful tool that consumers and credit educators can leverage in order to increase their understanding of the increasingly diverse world of credit scoring," Barrett Burns, president/CEO of VantageScore Solutions, said. "We redesigned CreditScoreQuiz.org to make it even more accessible than the former quiz, which has been taken by more than 50,000 consumers."
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