More people are checking their credit scores than four years ago, but about 40 percent of consumers have misconceptions about what affects your credit
Nearly 2 in 5 consumers incorrectly believe marital status affects your credit score, and the same amount think age is a factor, according to a new poll.
The survey, commissioned by the Consumer Federation of America (CFA) and VantageScore, also found that 57 percent of consumers obtained at least one credit score in the past year, up from 49 percent in 2014. But only 36 percent said they recently pulled their credit reports, and the percentage who think it’s important to do so declined from 72 percent to 67 percent between 2014 and 2018.
Age (41 percent) and marital status (38 percent) aren’t the only factors that consumers erroneously believe have an impact on their credit.
Even higher percentages believe tax liens (64 percent), medical collections less than six months old (62 percent) and civil judgments (63 percent) are used to calculate credit scores. But those three factors are all but excluded from consumers’ credit reports due to rules recently adopted by the three major credit reporting agencies – Equifax, Experian and TransUnion.
Barrett Burns, CEO of VantageScore, said on a conference call that some consumers may believe age affects your credit score due to confusion about length of credit history, which is a credit scoring factor.
Additionally, CFA Executive Director Steve Brobeck noted that age and marital status were used in credit decisions many years ago, which could add to some consumers’ misconceptions about the modern credit scoring system.
Neither age nor marital status are included in consumers’ credit reports, and they have no affect on credit scores.
Large majorities of consumers were able to correctly identify some key credit scoring factors, including missed payments (86 percent), high card balances (81 percent) and bankruptcies (79 percent). Payment history and credit utilization are the two most important factors in FICO’s scoring model, and a bankruptcy can drop your credit score by more than 200 points.
People who recently checked their credit scores tend to have more general knowledge about scores than those who don’t. For instance, 94 percent of people who obtained their scores in the past year know that card issuers use scores in credit decisions, compared to 76 percent who have not recently pulled their scores. Ninety-one percent of recent score-checkers know that 700 is a good credit score, compared to 74 percent of non-score-checkers who said the same.
The national survey of 1,005 Americans was conducted by landline and cellphone by ORC International May 31-June 3, 2018 and had a margin of sampling error of plus or minus 3 percentage points.