Pay attention to this story about credit score uncertainty.
If you are like as many as 40 percent of consumers, you'll need to really cram.
Women have a better handle on credit scores than men. People between the ages of 35 and 44 know more about scores than other age groups.
Unfortunately, all consumers as a group, know a whole lot less about credit scores than they should, but it doesn't take a lot of effort to bone up.
In fact, the multiple choice, 21-question Credit Score Quiz can quickly get you up to speed.
You'll learn that personal characteristics like age and marital status don't impact your score. Some 40 percent of those recently surveyed got that one wrong.
You'll also learn what more than one in four consumers don't know - key ways to raise or maintain your score is to keep credit card balances low and don't apply for several cards at the same time.
Duh.
The Consumer Federation of America (CFA), along with VantageScore Solutions, a purveyor of credit scores, recently released a shame-on-you survey of more than 1,000 adults that found between one-quarter (25 percent) and two-fifths (40 percent) incorrectly answered wide-ranging questions about credit scores.
What's a credit score?
To get you started in the right direction, a credit score is a numerical representation of your credit behavior as represented by your credit report.
The higher the score , the better your chances of obtaining credit at the best price.
Lower scores reduce your credit approval rating, they leave less credit available to you and what is available will cost you more.
Today's risk-adverse mortgage lenders rely heavily upon credit scores to approve or reject mortgage applications as well as other credit.
"Misperceptions about credit scores are extremely concerning," said Barrett Burns, President and CEO of VantageScore Solutions.
"People who fail to understand exactly what can impact their score have little incentive to manage the real things that truly do make a difference; such things as paying bills on time, keeping credit card balances low, and not taking out unnecessary loans. We encourage all consumers to take the credit score quiz and empower themselves to become better credit managers," Burns added.
CFA and VantageScore Solutions recently updated the interactive quiz to give you an edge before you apply for credit.
More women know the score
The survey revealed women are one up on men when it comes to credit score knowledge.
-Far fewer women then men incorrectly believe that age (38 percent vs. 48 percent) and marital status (34 percent vs. 46 percent) are used in calculating credit scores.
-Far more women correctly understand that credit bureaus collect the information for scores (74 percent vs. 68 percent), know what a good score is (36 percent vs. 29 percent), know when scores are free (65 percent vs. 60 percent) and are otherwise more knowledgeable than man.
-Men, however, are more skeptical about the value of credit repair agencies – only 32 percent think these agencies are always or usually helpful compared to 40 percent of women who believe this.
Those who've bothered to check their credit score also have an edge on knowledge.
Significantly more consumers who know their score understand that lenders and service providers use scores, that three large credit bureaus collect the information on which credit scores are most often based and that consumers have more than one credit score, among other information.
Parents could teach kids a thing or two
By age groups, young adults between the ages of 18 and 34 know as much about credit scores as the rest of the adult population, but those between the ages of 35 and 44 know even more.
The 35-to-44 age group is the group most likely to have recently purchased a wide range of services, including loans that are affected by credit scores.
The survey also found one question nearly everyone (94 percent) answered correctly: "Does making loan payments on time help raise your credit score?" The answer, of course, is "Yes."
Nearly everyone (93 percent) answered one question wrong: "Will making several inquiries about getting a consumer or mortgage loan in a one-to-two week period lower your credit score. The correct answer? "No."
"Consumers should not worry that comparison shopping for a loan in a week or two will lower their scores," said Stephen Brobeck, CFA's executive director.
"And this shopping will help ensure they obtain the lowest possible price for that loan."
So go ahead. Test your credit score I.Q. You've got noting to lose, except a higher credit score.
http://www.creditscorequiz.org/
Published: May 23, 2013
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