Americans clueless on credit scores
Credit scores have a huge impact on personal finances, but many consumers don't know when or why they're used -- or even how they're compiled.
This post comes from Elizabeth Ody at partner site Bloomberg Businessweek.
About 67% of those surveyed incorrectly said that age is used in calculating credit scores, and a majority of those surveyed didn’t know that a landlord or a cell phone company may consider applicants' numbers in deciding whether to offer housing or service and at what price. Almost half of respondents correctly said a credit score is primarily used to assess risk for lenders that a borrower won’t repay a loan, according to the report released this week.
"When we totaled up the scores Americans only scored a 60, which if you're in school is a low passing grade," said Stephen Brobeck, executive director of the Washington-based CFA, a nonprofit that advocates for consumers.
Most of those surveyed correctly identified what actions would help their score, including making all loan payments on time and avoiding opening several credit card accounts at once. Post continues after video.
"We're having a breakdown in consumer education," said Linda Sherry, spokeswoman for advocacy group Consumer Action. Rather than getting "hung up" on the details of credit-scoring models, "the main point of advice for keeping a good score is to pay your bills on time and not to take out more credit than you need," said Sherry, who is based in Washington.
The CFA and Stamford, Conn.-based VantageScore hired Opinion Research Corp., based in Princeton, N.J., to survey more than 1,000 Americans by phone in January. VantageScore is a joint venture of three credit bureaus, Equifax, Experian and TransUnion, and calculates credit scores on a scale from 501 to 990. VantageScore was created in 2006 to compete with the FICO credit score, developed by Minneapolis- based FICO Corp.
Read more from Bloomberg Businessweek and MSN Money:
If you could check your "credit score" like you check your bank balance more people would understand it and manage it. As it is your score is a black-box operation. You have no idea what it is any given day or month or even year and you can't find out what this "all-important" number is unless you apply for credit (which can lower it) or pay a fee to FOR profit business. and a free credit report does not give you your credit score....
Quite a scam, since those who do the scoring are answerable to no-one.
BTW - credit scoring can NO LONGER be used in hiring per the NLRB as it results in a disproportionate bias against women and minorities.
and ask all those banks dealing with "walk-aways" if their FICO score did any good....
I have a real problem with Credit Histories and credit scores, These are private companies that are accessing my private information, They take the information and compile it and make profits off of it, Not only do they have access to my information but when they make a mistake or if someone else fraudulently uses any of my personal identifiers the credit company uses that against me and does not even do any research to find out if the information is correct or accurate.
Americans clueless???? This article should be edited to say "SOME" Americans are clueless.
This is for the MSN Money staff that posts these articles. Why don't you post some basic information on how the "Clueless" American can become informed? I'm really getting sick of the cut and paste articles that insult reader's intelligence and don't offer anything but blowhard opinions instead of TOOLS AND INFORMATION WE CAN WORK WITH THAT MAKES OUR LIVES BETTER!!
I can't tell you how good it feels to turn the tables on the credit industry and tell them I'm not interested in using their credit cards.
It's really wonderful to not be a slave to credit cards, not having to answer to anyone and pay ridiculous and unnecessary fees.
"When we totaled up the scores Americans only scored a 60, which if you're in school is a low passing grade," said Stephen Brobeck, executive director of the Washington-based CFA, a nonprofit that advocates for consumers. "
School must have really changed in the last 40 years because when I went to school 70 or above was a passing grade and 69 and below was a failing grade.
The three main credit companies will never tell you exactly how they compute these scores. Or why the simple act of closing an unwanted credit card LOWERS your score? Why do we let prospective employers view score we don't get to see? Why is it next to impossible for an individual to dispute anything about these scores or have them corrected, but any company from anywhere can look at the scores and negatively impact them? Why are companies allowed to advertise on TV that they can send us our scores for free when the scores that they send are all fake?
These companies have WAY TOO MUCH control over our lives with far too little accountability.
This ought to be the next battleground for complete reform.
Don't borrow money - if you don't have cash , you don't need it.
Never trust a BANK, LAWYER, HOSPITAL, or INSURANCE AGENT
This article has a mistake, Age is used in calculating your credit rating, you loose points for being younger or older. Youth loose points for lack of experience, seniors loose points for potential death.
Your credit company will not show you that they use this, however in working in a credit union I have seen the paperwork that substantiates this.
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