The Consumer Federation of America and VantageScore Solutions recently unveiled their fourth annual survey on consumers’ understanding of credit scores. The survey focuses on consumer knowledge of credit scores depending on demographics such as age and access to credit reports.
The study finds that millennials (those between the ages of 18 and 34) know less about credit scoring than older credit card holders. For example, millennials know less about which businesses use credit scores.
They also know less about who collects information on which the scores are based. In addition, many younger card holders are more likely to think credit repair companies can always or usually be useful in correcting errors and improving scores.
Here are some of the survey results:
- When asked which of six types of businesses (from credit card issuers to landlords to cell phone companies) might use credit scores, only 18% of millennials, compared to 32% of older consumers, correctly identified all six.
- Less than half (47%) of millennials (compared to 60% of those 45 to 64 years of age) know that age is not used in calculating credit scores.
- Less than two-thirds (65%) of millennials, but three-quarters (75%) of older adults, know that the three main credit bureaus collect information on which credit scores are based.
- Half (50%) of millennials, but nearly three-fifths (59%) of those 45 to 64 years of age, know that credit repair companies only occasionally or never are helpful in correcting credit report errors and improving credit scores.
The Consumer Federation of America says a key reason for their lack of knowledge could be that millennials are less likely than older Americans to have obtained their free credit reports (49% vs. 74%). Consequently, they are less informed about how credit scores and reports actually work.
The Consumer Federation of America is encouraging consumers to take their free online credit score quiz, which outlines the basics of credit scoring and how one can improve their number. Those who complete the quiz this month have a chance to enter a drawing for a $500 gift card.