According to the CFA:
- 40% of consumers don't know credit card companies use credit scores to weigh credit approval, and 42% of consumers didn't know the same thing about mortgage lenders.
- About 40% of consumers believe marriage and age are used in calculating credit scores.
- Between 25% and 33% of consumers didn't know lenders were supposed to let them know what credit score was used in weighing a lending decision.
"Credit scores have become so influential in the lives of most consumers that tens of millions are severely disadvantaged by their lack of knowledge about these scores," says Stephen Brobeck, CFA's executive director. "Low credit scores will often cost car buyers more than $5,000 in additional finance charges and cost home purchasers tens of thousands of dollars in additional mortgage loan costs. And low scores are likely to limit consumer access to, and increase the cost of, services such as cellphone service, electric service, and rental housing."
Now Lexington Law, a Salt Lake City credit repair firm, is looking to help financial consumers with some handy tips on better understanding credit and credit scores.
"It's been easy for Americans to be in the dark about their credit scores because the credit scoring system itself can be confusing," says John Heath, directing attorney for Lexington Law. "That said, it is important not to remain in the dark about credit scoring. Americans can better prepare their financial future by educating themselves regarding credit scoring because credit scoring affects our financial relationships, our potential employment relationships and even how we are insured. The danger of remaining in the dark opens Americans up to the possibility of not getting that needed loan, that better job or an advantageous insurance rate."