Global risk and information solutions provider
TransUnion® (NYSE:TRU) released its third annual credit
literacy survey today, exploring the state of U.S. consumer credit
knowledge.
The 2017 Myths vs. Facts
Survey revealed consumers remain misinformed about
many fundamental aspects of credit scoring, reporting and building,
and lack basic information about the factors that impact a credit
score.
With the average VantageScore hovering at 645 in the United
States, according to data from TransUnion’s proprietary consumer
credit database, the findings of the survey underscore the
importance of continued credit education.
“Making credit education accessible for all consumers is one of
our top priorities,” said Heather Battison, Vice President of
TransUnion. “In general, Americans should invest more time and
energy into managing their credit. I can’t overstate the importance
of good credit. There are so many stories out there of people who
have struggled to make ends meet because they made mistakes that
damaged their credit early in life. Our goal is to prevent that by
eliminating credit confusion through ongoing education.”
The 2017 findings explore the most common credit questions
received by the TransUnion consumer relations team and debunks six
of the most pervasive myths about credit.
Myth #1: Closing a credit account is bad for your credit
score. More than one-third (35 percent) of consumers
believe closing a credit card account decreases a credit score, and
another 20 percent say they have no idea what effect it would
have.
The truth is, the impact of closing a credit card account varies
based on the percentage of available credit the card provides and
the length of credit history associated with the account. If the
card represents a small amount of available credit or has a short
credit history, the closing may have minimal or even no impact on a
credit score. However, if the card in question has a consumer’s
longest credit history, or if it represents a large portion of
their available credit, it may have a negative impact.
Consumers should weigh all of those factors before closing a
credit card account.
Myth #2: Activating a credit freeze or credit lock will
prevent lenders from accessing your credit report from all three
credit report agencies at once.There are three major U.S.
credit reporting bureaus and each has a credit report for all
credit-active consumers in the country. A lot of experts encourage
consumers to freeze or lock their credit reports when they are not
using them to help protect against fraudulent activity.
When asked, nearly half (48 percent) of respondents said they
believe it’s possible to protect all of their credit reports at
once, but the fact is that there is no one tool that protects all
three credit reports at once.
In June of this year, however, TransUnion and Equifax announced
Multi-Bureau Lock, the first-ever joint credit protection offering,
which allows customers to lock or unlock both their TransUnion and
Equifax credit reports simultaneously to protect from fraudulent
activity and identity theft.
Myth #3: Credit reports include marital
status. Close to half (44 percent) of all consumers
still don’t know this basic fact - marital status isn’t on a credit
report. Consumers ages 55 and up were the most likely to get this
wrong, with more than half (51 percent) believing marital status is
factored into credit reports.
While marital status does not appear on a credit report, credit
still plays an important role in couples’ lives, particularly if
they want to finance joint purchases like a house or car. Couples
shopping together should keep in mind that the individual with the
lower credit score in any couple can dictate lending terms or even
loan approval rate for the pair, if they are applying jointly.
Myth #4: Credit scores impact your ability to travel
internationally. Some consumers (31 percent) are still
confused about whether or not healthy credit is required to enter a
foreign country. It’s not.
Travelers may find credit beneficial if they want to use a
credit card to finance their international trips. And, of course,
it’s crucial for consumers to pay off any financial obligations
from their vacation on time and in the full amount to avoid
damaging their credit score. But the mere ability to travel from
one country to another does not require healthy credit.
Myth #5: Checking your own credit is bad for your credit
score. Forty-three percent of consumers think checking
your own credit score has the same effect as when a lender checks
it. In reality, there’s a big difference between the two types of
credit checks.
Soft inquiries – when a consumer checks his or her own credit –
doesn’t impact their credit score. In fact, regular credit
monitoring is crucial for credit health and helps ensure
information is accurate and up to date. It’s the hard inquiries –
when a lender checks a consumer’s score to determine credit
approval – that impact scores, and can stay on a person’s credit
report for up to two years.
Myth #6: Late payments like utility bills are always
included in credit scores.This is another tricky one: not
all utility payments are reported to credit reporting agencies, so
the impact on credit scores varies. For example, some utility
companies report both on-time and late payments, whereas others
only report late payments or ones that have gone into collections.
So the 51 percent of survey respondents who said utility payments
are included in their score are only correct in some instances.
Timely repayment of financial obligations is one of the
cornerstones of credit health, which is why it’s so crucial to
ensure the payment of all outstanding charges on time and in the
full amount each month. Even small utility bills, if not paid, can
damage a credit score.
For more information about credit myths and facts, or to sign up
for tools to help manage your credit, visit TransUnion’s
website.
About the SurveyThe online survey includes
responses from 1,002 U.S. consumers age 18 and older. The survey
was conducted between June 1, 2017 and June 6, 2017.
About TransUnion’s Proprietary DataTransUnion’s
proprietary data queries are pulled from its database of hundreds
of millions of credit-active consumers. The information in this
report is based on a March 2017 analysis of the credit and debt
behaviors of a random sample of 15 million consumers in that
database.
About TransUnion (NYSE:TRU) Information is a
powerful thing. At TransUnion, we realize that. We are dedicated to
finding innovative ways information can be used to help individuals
make better and smarter decisions. We help uncover unique stories,
trends and insights behind each data point, using historical
information as well as alternative data sources. This allows a
variety of markets and businesses to better manage risk and
consumers to better manage their credit, personal information and
identity. Today, TransUnion has a global presence in more than 30
countries and a leading presence in several international markets
across North America, Africa, Latin America and Asia. Through the
power of information, TransUnion is working to build stronger
economies and families and safer communities worldwide.
We call this Information for Good. transunion.com
Contact
Bob Skwarek
TransUnion
E-mail rskware@transunion.com
Telephone 312-985-2453
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