Americans’ credit know-how seems to be on the decline. This year’s annual survey from VantageScore Solutions and the Consumer Federation of America shows that consumers know less today about how credit scores work than they did eight years ago.
Yet more people these days think their understanding of credit scores is pretty strong, the survey also found.
At a time when people are taking on record levels of debt, this gap between perception and reality shows how important it is for consumers to ramp up their financial education.
Want to know more?
What are the details of this latest survey?
Americans have some basic knowledge gaps when it comes to credit scores, according to the survey. For example …
- 62% know they have more than one credit score — a drop of 16% since 2012
- 66% know keeping credit card balances low is good for their credit scores — down 19% from 2012
Yet more people — 60% today versus 54% in 2012 — feel confident in their credit knowledge.
VantageScore Solutions suggests the disconnect between confidence and actual knowledge could be due in part to improvements in the economy since 2012. The theory is that people haven’t focused as much on financial education because they’re doing better and it seems less critical. Another contributor might be that people feel less vulnerable in light of reports that credit scores overall across the country have gotten stronger, according to the company.
How can you boost your credit knowledge?
You can tap into a number of free resources to strengthen your knowledge about credit.
Credit Karma offers info on things like how the VantageScore 3.0 scoring model works and factors that can affect your credit. And as a member of Credit Karma, you can stay on top of your VantageScore 3.0 credit scores from TransUnion and Equifax.
The Consumer Financial Protection Bureau also has educational resources on credit scores and credit reports. And all three major credit bureaus — Equifax, Experian and TransUnion — offer online educational materials.