San Diego, CA - Consumers
understand the basics of credit reporting, but could use
more education on what credit scores mean in their lives,
according to a survey of 1,578 consumers conducted by the
General Accounting Office.
The survey found that about 60% of consumers surveyed had
seen their credit reports and most consumers understood
what a credit report contained and the sources of this
information. However, many consumers did not know more
detailed information, such as how long items remained on
their credit reports or the impact their credit history
could have on insurance rates and potential employment.
Many consumers were also not aware that certain behaviors,
such as using all their available credit, could negatively
affect their scores, the report found.
Similarly, GAO found that most consumers knew they had the
right to dispute information on their credit reports, and
a small percentage, 18%, had disputed inaccuracies. But
most consumers did not fully understand their rights in
the dispute process, for example, that there is no cost to
dispute inaccurate information or that they could contact
the Federal Trade Commission if they could not resolve a
dispute with the CRAs.
Less educated, lower-income individuals and people with
less experience obtaining credit were associated with
lower survey scores, while having certain types of credit
experiences, such as an automobile loan or a mortgage,
were associated with higher scores, according to the GAO.
The report says that educational efforts could potentially
increase consumers' understanding of the credit reporting
process and the efforts should target those areas in which
consumers' knowledge was weakest and those subpopulations
that did not score as well on this survey, the GAO says.
Also, the office recommends that the Chairman of the
Federal Trade Commission take steps to improve consumers'
understanding of how credit reports and scores are used,
their right to dispute inaccurate information, and how
consumers' credit behavior could affect their credit
Norm Magnuson, spokesman for the Consumer Data Industry
Association, the organization that represents the consumer
credit reporting industry, says that much progress has
been made in the last several years to educate consumers
on credit reports and to make credit reports more
accessible and understandable for consumers. For one
thing, he says, most credit reports are now issued in an
narrative format which provides explanations on what
scores mean and how they can be improved.
Just in the last year alone, significant progress has been
made in providing an incentive for consumers to access
their own reports with the passing of the Fair and
Accurate Credit Transactions Act, which mandates that
consumers are provided with access to their credit report
annually for free. "Offering a free report is a major
piece of financial literacy. The barrier no longer exists
to that information," Magnuson says.
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.