Equifax did study to commemorate Financial Literary Month in April 2016 and their online survey gathered responses from 1,008 consumers. Overall, the study found that most Americans are aware of credit and how it affects them. Here is a summary of its findings.
81% of respondents were aware that they could get a free credit report annually.
However, when asked when the last time was that they checked their credit reports:
This makes 40% of Americans that are not checking their credit reports, despite the high percentage of respondents who knew they could check for free. The survey did not ask consumers if they knew where to get their free credit reports; but for the record, the best source for your free reports is the government-run website annualcreditreport.com.
Checking your credit report at least yearly is very important to make sure you are not a victim of identity theft and also to make sure you there are no errors on your report. Credit report errors can take long time to correct in some instances, so you don’t want to be caught unaware when you are applying for new credit. Identity theft issues can drag on for 6 months or more.
Most Americans have at least one credit card. Some of the stats:
Having a credit card is an effective way of building and maintaining your credit worthiness. However, be warned: the overuse of credit cards is one of the biggest reasons people get into trouble with their credit: they get into debt and can’t make payments, resulting in late pays on their credit reports and if things go too far, collections. Buying things within your credit budget is part of being fiscally responsible.
Another thing to consider when applying for credit cards: every time you apply for a loan or credit card, an inquiry is placed on your credit report, and this inquiry can drop your score by up to 5 points. In addition, getting any type of new credit will lower the average age of your accounts, which can also drop your credit score. If your credit is bad, and you are having trouble getting approved for a credit card, you might want to consider getting a secured credit card.
When applying for new credit, most lenders do not look at your credit report to analyze it, but instead look at your credit score, and base their decision on that. In the Equifax survey, respondents said:
If you get your credit score, you should use it as a yardstick for your credit and not treat it as an absolute number. There are two main classes of credit scores: FICO scores and VantageScores, and each type has many subtypes of scores: specialized scoring models for mortgages, autos, credit cards, etc.
If you get your credit score for free at one of the many free score sites, you are most likely getting a version of the VantageScore; most lenders use a version of the FICO score. If you buy your credit score from myFico.com, you are going to get the FICO 9 version of your score, a score that many lenders have not yet adopted (most lenders use the a version of the FICO 8 credit score for credit cards, and FICO 04 for mortgage underwriting).
To see where you fit in the credit score landscape, review our report on credit scores in America.
There has been a push to educate consumers on the intricacies of credit, and for the most part, it seems to be working:
In general, your credit is affected by 5 main factors: the amount of debt you have, your payment history, the average age of the accounts you have, the types of credit you have and the amount of new credit you have.
Other tips for improving your credit besides paying your bills on time (by far the most important aspect of your credit score):
If you do find errors on your credit report, you can contact CreditRepair.com for help.
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