As companies and organizations increasingly utilize credit scores to
evaluate individuals as prospective customers, employees or tenants, it is essential that
consumers know their credit score, understand what it means, and learn how to raise it. But
according to a new survey developed by the Consumer Federation of America (CFA) and
Providian Financial, most Americans do not understand credit scores even when they think their
knowledge of credit is good.
Most consumers do not understand what credit scores measure, what good and bad scores
are, and how scores can be improved, according to the survey of 1027 representative adult
Americans administered by the Opinion Research Corporation International for CFA and
Providian in late July. A follow up survey will be conducted in 2005.
"Now that credit scores are increasingly used by utilities, insurers, and employers, as well
as creditors, it is essential for consumers to learn their score and what it means,” said CFA
Executive Director Stephen Brobeck. "The cost of not knowing your score and its significance
could be not only denial of credit but also difficulty obtaining needed services and even a job,"
Most consumers surveyed correctly understand that lenders use credit scores, but only a
minority know that electric utilities (30%), home insurers (47%), and landlords (48%) often use
credit scores to decide whether to sell a service and at what price. The survey's good news is that
most consumers (59%) recognize that their knowledge of credit scores is poor or fair and,
therefore, are more likely to seek this knowledge once they understand how important their
credit scores are to their lives.
“Many consumers may not have taken the time to learn more about credit scores because
they do not know how scores affect the availability and price of credit,” said Providian Senior
Vice President Alan Elias.