Washington, DC- A new survey
commissioned by the Consumer Federation of America (CFA)
has found that consumers lack essential knowledge about,
and strongly support new protections for, credit reporting
and credit scores. An important finding of the survey is
that low- and moderate-income Americans -- those who tend
to pay the highest price for credit and are most
vulnerable to inaccurate credit scores -- are the least
knowledgeable about credit reports and scores.
"A strikingly high percentage of Americans not only do not
understand basic facts about credit reports and scores,
but also acknowledge their own lack of understanding about
the subject," said CFA Executive Director Stephen Brobeck.
"This recognition, and awareness of the growing importance
of credit scores, may explain why there is overwhelming
support for new consumer protections," he added.
CFA undertook this survey because the U.S. Senate Banking
Committee has asked it to submit testimony about consumer
knowledge related to credit reports and scores. This
hearing is related to the expiration early next year of
some provisions of the federal Fair Credit Reporting Act.
hearing record of this committee has documented that
credit reports and scores are often inaccurate and
incomplete, and that these inaccuracies result in many
Americans being denied, or paying a high price, for credit
and other services.
"An overwhelming majority of Americans believe they need
greater rights under the Fair Credit Reporting Act," said
Travis Plunkett, CFA's Legislative Director. "Consumers
want easier access to their credit reports and scores,
greater protections against privacy and credit reporting
abuses, and the right to go after lenders in court who
repeatedly make grievous reporting errors."
The survey was conducted by Opinion Research Corporation
International. ORCI interviewed a representative
sample of more than 1,000 adult Americans from July 18 to
21, 2003. The survey's margin of error is plus or minus
three percentage points.
Most Americans Say They Don't Understand Credit Reports
and Scores Well
When asked to assess their knowledge of credit reports and
credit scores, most Americans say their knowledge is
"fair" or "poor." Fifty percent said their knowledge of
credit reports was fair or poor, while 61 percent said
their knowledge of credit scores was fair or poor.
Lower-income Americans are those most likely to believe
their knowledge is not good. More than 60 percent of those
in households with incomes under $35,000 said their
knowledge of credit reports was fair or poor. Nearly
seventy percent of these low- and moderate-income
Americans said their knowledge of credit scores was fair
Young adults between the ages of 18 and 24 were also
likely to say their knowledge was not good. Sixty-two
percent said their knowledge of credit reports was fair or
poor, while 78 percent said their knowledge of credit
scores was fair or poor.
Many Americans Lack Essential Knowledge About Credit
Reports and Scores
The survey also tested actual consumer knowledge about
credit reports and scores. Only 25 percent of Americans --
and less than 20 percent of those with incomes below
$35,000 -- said they knew what their credit score was. And
only three percent of Americans could, unprompted, name
the three main credit bureaus -- Experian, Equifax, and
Trans Union -- that provide both lenders and consumers
with information from credit reports. Forty-three percent
of Americans -- only 35 percent of those with incomes
below $35,000 -- said they had obtained a copy of their
credit report from the three credit bureaus in the past
The survey also tested consumer knowledge using a series
of true-false questions. The good news from this test is
that large majorities understand that consumers have the
right to see their credit report (97 percent) and that
consumers who fail to qualify for a loan have the right to
a free credit report (81 percent). The bad news is that
many consumers do not understand that in most states they
must pay a fee to obtain their credit report (54 percent),
that their credit score may be
lowered if they use all of the credit available on their
credit card (55 percent), that their credit score may be
lowered if they apply for a credit card (62 percent), and
that they are not required to contact
their lenders if they believe that their credit report or
score is inaccurate (64 percent). Also, 27 percent
incorrectly believe that their credit score mainly
measures their knowledge of consumer credit, not their
Finally, the survey tested knowledge about which service
providers often use credit scores to decide whether
consumers can purchase a service or at what price. Many
Americans are not aware that certain service providers
frequently use these scores -- 60 percent were not aware
electric utilities do so, 41 percent for home insurers, 41
percent for landlords, and 38 percent for cell phone
companies. By comparison, only 13 percent did not know
that credit card companies use credit scores. Large
Majorities Support Stronger Consumer Protections
The survey also questioned Americans about their opinions
on new consumer protections currently being considered by
Congress. The protections would give consumers greater
access to their credit reports and scores, and strengthen
individual remedies that they could pursue.
The protections would also require credit bureaus to do a
better job of verifying consumer identities and would
proscribe certain lender Practices.
Large majorities indicated their support for these
protections. Credit bureaus should do a better job
of verifying identities on credit applications to reduce
identity theft 96% support, 83% strongly.
Consumers who are denied a loan or charged a high price
should be able to get from the lender a free copy of the
credit report and score used as the basis for the lender's
decision 94% support, 78% strongly.
A bank should not be allowed to use your medical
information to make credit decisions without your consent
87% support, 77% strongly. A bank should be required
to obtain your permission before it can share your
financial information with other companies it owns 91%
Consumers should be able to obtain a free credit report
and score once a year from the three main credit bureaus
91% support, 71% strongly. Consumers should be able
to sue lenders who knowingly provide credit bureaus with
incorrect, damaging information 84% support, 62% strongly.
A credit card lender should not be allowed to raise the
interest rate because of a credit problem that involves
another lender 75% support, 52% strongly.
"This study provides Congress with a roadmap on how to
make the Fair Credit Reporting Act work better for
consumers," said Plunkett. "Consumers want a credit
reporting system that is more accurate, more transparent
and that better protects their privacy. The best way to
achieve this is to put strong baseline federal standards
on the books and to allow the states to exceed these
standards when needed," he said. "The results of our
survey also point to the need to improve financial
education efforts in this country."
The Consumer Federation of America (CFA) is a non-profit
association of 300 pro-consumer groups, which was founded
in 1968 to advance the consumer interest through advocacy
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation). The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely.
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.
The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org). CASDRAP disbanded in 2010, shortly after the web site project was completed. In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.
The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.
Visit the ICFE's other web sites at: www.financial-education-icfe.org and studentdebthelp.org. Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G, a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.
About the ICFE:
The Institute of Consumer Financial Education (ICFE), founded in 1982 by the
late Loren Dunton (creator of the 'certified financial planner' (CFP)
designation) and it is dedicated to helping consumers of all ages to improve
their spending, increase savings and use credit more wisely. The ICFE trains and
certifies Personal Finance Instructors for its own curriculum. It also trains
and certifies Credit Report Reviewers and Identity Theft Prevention Specialists.
The ICFE is an award winning, nonprofit, consumer education organization that
has helped millions of people through its education programs and Resources. It
publishes the Do-It-Yourself Credit File correction Guide, now in its 16th
printing and has distributed over one million 'Credit/Debit Card Warning Labels'
and 'Credit/Debit Card Sleeves' world wide.
The ICFE became an official partner with the Department of Defense/Financial
Readiness Campaign in June of 2004.
The ICFE is also a partner in the national Jump$tart Coalition for Financial
Literacy and the California Jump$tart chapter. The ICFE staff is also active
with San Diego Saves, an offshoot of America Saves, and the California Student
Debt Resource Awareness Project (CASDRAP) (studentdebthelp.org).
The ICFE's on-line help for consumers who spend too much was featured in PARADE
Magazine in the Intelligence Report section. The money helps and tips are from
'The Money Instruction Book,' a course in personal finance, positioned to become
among the premier programs in the new bankruptcy and debtor education
The ICFE Web site at:
www.financial-education-icfe.org helps consumers with mending spending, learning about
the proper use of credit, budget and expense guidelines, how to set up and
implement a spending-plan and also how to access financial education courses and
videos and how to teach children about money. Other ICFE services include a free
eNews, and an online resource center of financial education learning
tools, including videos, books, software and personal finance courses.