According to a survey from the Consumer Federation of America and VantageScore Solutions, the majority of Americans don't understand how their credit scores are determined and when and how they're used.
Of those surveyed, more than 67 percent incorrectly said that a person's age is considered when determining a credit score. Moreover, a "majority" of those polled were unaware that a cellphone provider or landlord could consider an applicant's credit score in deciding whether to offer housing or service – and at what price.
The survey underscores the importance of credit scores and the scores of Americans whose credit scores were negatively impacted during the recession. Though they revealed some deep confusion about credit reports, consumers were at least able to identify the primary use of a credit score: Nearly 50 percent of survey respondents correctly said they are used to assess risk for lenders that a borrower will default on a loan.
Stephen Brobeck, the executive director of Washington-based CFA, told Bloomberg that Americans received a barely passing grade in their understanding of credit scores. "When we totaled up the scores Americans only scored a 60," he said. "Which if you're in school is a low passing grade."
Nonetheless, most of the survey respondents also knew the best ways to raise a low credit score include making all loan payments on time and avoiding opening several credit card accounts at once.