Survey: low-income consumers less likely to understand their credit scores

The recently released tenth annual credit score survey reveals that most Americans have gaps in their knowledge of credit scores. The survey of 1,001 Americans by the Consumer Federation of America and VantageScore Solutions shows that 20 percent of households with incomes below $25,000 intend to apply for credit in the next year. Only 13 percent of households with at least $75,000 in income intend to apply for credit in the next 12 months.

Unfortunately, the survey shows that those in low-income households are much less likely than those in high-income households to correctly answer questions about credit scores.

According to the survey, nearly all (95 percent) with an annual income of at least $75,000 know that mortgage lenders use credit scores when deciding on loans. Seventy-five percent of those with incomes below $25,000 answered the same question correctly.

Here are some other credit-score questions and percentages of those who answered correctly:

  • Do credit card issuers use credit scores? Correct answer: Yes.

Income of at least $75,000: 92 percent answered correctly
Income below $25,000: 76 percent answered correctly

  • Does personal bankruptcy influence credit scores? Correct answer: Yes.

Income at least $75,000: 92 percent
Income below $25,000: 72 percent

  • Do high credit card balances influence scores? Correct answer: Yes.

Income at least $75,000: 92 percent
Income below $25,000: 76 percent

  • Do consumers have more than one credit score? Correct answer: Yes.

Income at least $75,000: 74 percent
Income below $25,000: 43 percent

  • Is 700 usually a good credit score? Correct answer: Yes.

Income at least $75,000: 83 percent
Income below $25,000: 69 percent

As you can see, consumers with higher incomes answered correctly more often than those with incomes below $25,000 annually. Of course, there were gaps in knowledge at both income levels.

FindLaw Network