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Press Release

Halloween Fright: Most Consumers Don't Know Their Credit Score

PR Newswire

Association offers tips for consumers to improve their score

WASHINGTON, Oct. 25, 2013 /PRNewswire-USNewswire/ -- With Halloween around the corner, consumers applying for credit could be in for a scare.  A new survey from the American Bankers Association found that most U.S. consumers don't know their own score, despite its importance not only in determining whether they can get credit cards, auto loans and mortgages, but also in employment and insurance decisions.  The survey found that only 42 percent of consumers know their credit score. 

"People might have a scare when they apply for a loan and discover that a low credit score could mean a higher interest rate or no loan at all," said Nessa Feddis, ABA's senior vice president and deputy chief counsel for Consumer Protection and Payments.

The annual survey of 1,000 U.S. adults was conducted for ABA by Ipsos Public Affairs, an independent market research firm, Aug. 8-13, 2013. Fifty-six percent of respondents indicated they did not know their credit score, and 2 percent did not answer the question.

Credit scores represent a person's creditworthiness and can be obtained from the major credit bureaus—Experian, TransUnion and Equifax. Lenders use a consumer's credit score to decide whether to lend them money and at what rate. Credit scores are also used by organizations for screening employment, insurance and other applications.  A consumer's credit report, which indicates whether a person pays their bills on time and how much of their available credit they use, influences their credit score.

"There is no overnight fix for a low credit score, but there are steps you can take to improve it over time," said Feddis.  "Paying your debts on time and demonstrating that you can manage credit responsibly can help you gradually rebuild your score."

Below are tips from the ABA to help consumers improve their credit scores:

Credit Do's

  • DO order a copy of your credit report annually. The three major credit bureaus are required to provide you with a free copy of your credit report at your request each year. To get a free copy of your credit report, visit www.annualcreditreport.com or call 1-877-322-8228. You can also obtain your credit score from any of these credit bureaus for a reasonable fee.
  • DO know the power of credit. Banks look at your credit history as an indication of your future financial behavior. By using credit wisely, you can build a good credit history making it easier to get loans with low interest rates, rent an apartment, purchase a car or home, and may even help you get a job.
  • DO read the fine print on the credit application. The application is a contract, so read it carefully before signing. Credit card companies are very competitive so interest rates, credit limits, grace periods, annual fees, terms and conditions may vary.
  • DO pay at least the minimum due and contact your creditor if you have trouble making payments. This will help you to avoid late fees and a rising APR. To pay off your balance more quickly, pay more than the minimum due. If you are unable to make the minimum monthly payments, let your creditor know so they can work with you to create a more manageable payment plan.
  • DO be wary of anyone who claims they can "fix" your credit report. No one can legally remove negative information from your credit history if it is accurate. The only thing that can fix a credit report is time and a positive payment history.

Credit Don'ts

  • DON'T pay your bills late. Late payments can affect your credit rating and increase your balance. If you are unable to pay the minimum monthly payment, let your creditor know and they may be able to lower your payments.
  • DON'T spend more than you can afford. Credit is a loan and has to be repaid. It is your responsibility to manage your debts and to keep your commitment with lenders. Avoid reaching your credit limit or "maxing out" your cards.
  • DON'T ignore the warning signs of credit trouble. If you pay only the minimum balance, pay late, use cash-advances to fund daily living expenses or transfer a lot of balances you might be in the credit "danger zone." Talk to a non-profit financial counseling organization like the National Foundation for Credit Counseling (www.nfcc.org) to regain control of your finances.
  • DON'T share your credit card number. Never give out credit card or personal information if you have not initiated the transaction. Be aware of identity theft and phishing scams that ask for credit card numbers. If you suspect that your identity has been compromised, call your bank and file a complaint with the Federal Trade Commission at 1-877-ID-THEFT (1-877-438-4338) or www.ftc.gov/idtheft.

About the Survey

These are some of the findings of an Ipsos poll conducted August 8-13, 2013. For the survey, a national sample of 1,000 adults aged 18 and older were interviewed by telephone. Weighting was employed to balance demographics and ensure that the sample's composition reflects that of the universe. A survey with an unweighted probability sample of this size and a 100% response rate would have an estimated margin of error of +/- 3.1 percentage points 19 times out of 20 of what the results would have been if the entire population of adults aged 18 and older in the United States had been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

SOURCE American Bankers Association