Research of the Week: Americans’ Thoughts on Credit
More people are coming to recognize the importance of maintaining good credit.
Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…
The interesting study
The credit providers at Chase conducted a Slate Credit Survey to learn how Americans really felt about credit scores. The experts at Chase wanted to learn what perspectives people had about a good credit score and the importance of monitoring credit scores regularly, given that the new Slate credit card provides users with a free monthly FICO credit score – the score used by 90 percent of lenders during financing and lending decisions.
The big result
More and more, consumers seem to recognize how important good credit is, as well as how important it is to know their own score at any given time. Ninety percent of respondents believe access to credit is important for financial success and over 60 percent knew their current score.
The fascinating details
Of course, knowing your credit score and knowing how to maximize it are two entirely different things. The survey also found more than half (52%) of respondents did not know the payment history is the biggest factor used in calculating credit scores.
What’s more, many consumers tend to lowball the credit score needed to fall into the “good” range with lenders and creditors. Although the average for all respondents put a good credit score at 719, if you look at people who have never checked their credit score the score was lower at 668 – which would only be “fair” by most standards.
Chase also divided the results based on generation:
- Baby Boomers put a good credit score at 726
- Generation X set a good score at 712
- Millennials are below the curve at 695
However, while Boomers have the highest guess as to a good credit score, they also spend more time guessing about their own scores. Here are some additional generational results from the survey:
- Baby Boomers:
- 13% have never checked their credit score
- 60% know their current credit score
- 28% have never taken any steps to build a better score
- Gen X:
- Only 4% have never checked their credit score
- 67% currently know their score
- 62% say they could’ve benefited from knowing their score in the past
- 19% have never checked their credit score
- 55% have checked their credit score recently
- 19% haven’t ever taken steps to improve their credit scores
Chase also wanted to know, of the respondents who have never checked their credit, why they hadn’t bothered.
- 44% of those who don’t check their score say they don’t have a reason to check it
- 27% say they don’t have the time/money to check it and it’s too much effort
Additionally, they wanted to know why those who are checking their scores decided to do so. So why do consumer check their credit scores?
- 21% were concerned about their credit worthiness
- 22% believe it’s an important part of good finance
- 41% were curious
- 20% checked it because it was free
What you can do
At Consolidated Credit, we tend to agree with the 22 percent who believe that knowing your credit score is an important part of your financial outlook. If you use credit and have major financial goals like homeownership that require financing, then you need to have the best credit possible. If you treat credit in this way, then the rest comes naturally – you’ll be able to qualify for the right loans and credit cards at interest rates and terms that work for your budget.
Of course, checking your credit score may come with a price, depending on how you get the information. Although you are entitled by law to a free copy of your credit report once every twelve months, this report does not in include your credit score. So you have to find other means of obtaining your score if you want to know it.
There are plenty of credit monitoring services that offer free scores. Just be aware that you usually sign up for a free trial that last 7 days, then your credit card is charged for a subscription. These are monthly services that typically provide extra services like credit alerts and ID theft protection. You can also find a few credit monitoring services that are truly free – just make sure the service is secure.
Additionally, some credit card issuers are beginning to partner with credit scoring agencies to provide monthly credit scores for free to cardholders. Chase, the provider of this survey, offers a free FICO credit score every month, although other providers have similar services that provide credit scores from Experian or the other credit bureaus. Some issuers like Capital One even tie these free monthly credit updates to their secured credit cards, since secured credit card users tend to be actively working to improve their scores.
That doesn’t mean you should get a credit card just to get your credit score, but if you’re choosing between two cards because you need one anyway, then a free monthly credit score is definitely a strategic bonus – similar to the way that a 401(k) option from an employer may make a job opportunity more attractive. So if you’re not struggling with debt and you’re developing a strategic credit use plan, then you may want to consider this as an option.
Of course a high level credit strategy can only work if your finances are stable and you’re not currently struggling with debt. If you’re facing challenges because of high credit card balances, we can help. Call Consolidated Credit today at or complete an online application to connect for free with a certified credit counselor.