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What you don’t know about your credit score can hurt you

Friday, June 17, 2016   (0 Comments)
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NJ1015.com 06/17/16

 

A new survey about credit score knowledge finds many of us know the basics, but do not understand important details.

 

The survey was done for the Consumer Federation of America ( and VantageScore Solutions, LLC. They said 88 percent of mortgage lenders and 87 percent of credit card issuers use credit scores.

 

“As a result of our educational efforts and the efforts of many others, almost all Americans now understand the very most important fact about credit scores,, that they are used by lenders in decisions about whether to provide credit, and at what price,” said Steven Brobeck, executive director of Consumer Federation of America says.

 

People understand that credit scores are influenced by credit-related factors, such as timeliness of loan payments and credit card debt levels, “and that 700 or over is a good credit score.”

 

But according to Brobeck, the survey finds, “large minorities of our respondents were not aware that many non-creditors use credit scores. Only a minority of consumers know, for example, that low credit scores often increase automobile loan interest rates from under 5 percent to more than 20 percent.”

 

Utilities, for another example, also look at credit scores in establishing customer accounts.

Brobeck says all consumers should understand some credit score basics, such as late payments hurt that score.

 

“It is critically important to make all loan payments on time every month,” He said.

 

Other advice:

• Just a couple of late payments may lower your scores by 100 points or more.
ª Use only a small portion of the credit lines available on your credit cards.
º As the percentage of credit use rises, your credit scores decline.

 

The survey found gen-Xers had a better general knowledge of credit scores than millennials on eight of nine key knowledge questions.

 

“In part, this difference reflects the obvious fact that millennials are younger, so are less likely to obtain their credit scores or their credit report,” Brobeck said.

 

Brobeck says you can your credit reports to make sure than they are error-free: “that is especially important for those with common names like John Smith or Mary Jones. Fortunately, that can be done for free by contacting annualcreditreport.com, or by calling 800-322-8228.”


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