It’s depressing. Not surprising, but depressing.
It’s been seven years since Fair Isaac started peeling back the curtain on credit scores. Yet most consumers are still ignorant of the basics about what these numbers are, how they’re compiled and the influence they have in our financial lives.
The depth of their confusion is evident in a new poll released today by the Consumer Federation of America and Washington Mutual. Some of the lowlights include:
- Fewer than one in three consumers (29%) understand what a credit score does (which is measure the risk of default), yet nearly half (47%) identified their knowledge of credit scoring as “good” or “excellent”
- Fewer than half could identity the three major credit bureaus (Equifax, Experian and Trans Union)
- Four out of five (80%) incorrectly believe credit scores can be obtained once a year for free
- Three out of four (74%) believe credit scores are influenced by income. (Maybe this isn’t as surprising as I thought, since even the CFA’sÂ press releaseÂ makes a mistake about this, referring to “debt-to-income ratios” as a factor in credit scores. For the record, FICO credit scores don’t include any information about incomes or debt-to-income ratios.)
Educating consumers on credit scores clearly has a long way to go.