4 Costly Facts You Don’t Know About Credit Scores

What's Hot

Funny Money: Financial Wit and Wisdom From 50 Top ComediansCredit & Debt

Shoppers Boycott Businesses Selling Trump-Branded ProductsBusiness

50 Best Gifts Under $25 for Everyone on Your ListFamily

What the Richest 1 Percent Earns in Every StateFamily

6 Stores That Allow Coupon StackingSave

Why Washing Your Turkey Can Make You IllFamily

10 Ways to Retire Earlier Than Friends on the Same SalaryGrow

7 Foods That Can Lengthen Your LifeFamily

7 Government Freebies You Can Get TodayFamily

10 Ways to Pull Together the Down Payment for a HomeCredit & Debt

A survey finds that while most Americans now understand the basics of credit scores, many still fail to understand crucial details.

Pop quiz: By how much does a low credit score — compared with a high one — typically increase the cost of a $20,000, 60-month car loan?

Chances are you don’t know the answer, which is $5,000, according to the Consumer Federation of America’s sixth annual credit score survey. Just 22 percent of respondents got the answer right.

More than 1,000 people ages 18 and older were polled for the survey.

The results show that while most Americans now understand the basics of credit scores, many still fail to understand details that can literally cost them.

Such details include:

  1. The cost of low credit scores, as in the case of that car loan.
  2. That credit scores are used by noncreditors such as electric utilities, home insurers, cellphone companies and landlords.
  3. That marital status and age are not used in the calculation of credit scores.
  4. That lenders are required to inform borrowers of their use of credit scores after a mortgage application, when a consumer does not receive the best terms on a consumer loan and when a consumer is turned down for a loan.

More than 80 percent of Americans now understand the basics of credit scores, including:

  1. That credit scores are used by mortgage lenders and credit card issuers.
  2. The key factors used to calculate credit scores, such as missed payments, personal bankruptcy and high credit card balances.
  3. That ethnic origin is not used to calculate scores.
  4. That 700 is a good score.

Stephen Brobeck, the CFA’s executive director, says of the survey findings:

“The good news is that consumers understand the basics of credit scores, such as the importance of making loan payments on time. The bad news is that this knowledge is limited and, each year, can cost them hundreds of dollars in fees on services and additional interest on consumer loans.”

If you’re in the market for a loan, be sure to first check out “Car Loans: Are You Paying Too Much?” as well as “Your Mortgage: The Rate That Can Change Your Life.”

If you are unsure of your credit score, visit Credit Sesame for a free score.

How would you rate your credit-score knowledge? Let us know below or over on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: 5 Credit Problems That Can Destroy Your Home Dreams

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,892 more deals!