Nearly 40% of Americans don’t know their credit score – do you?

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Positive businesswoman with a giant pencil on his shoulder near a marked checklist on a clipboard paper.

Positive businesswoman with a giant pencil on his shoulder near a marked checklist on a clipboard paper.

According to the Federal Reserve Bank of New York, total household debt in the United States was over $13.5 trillion at the end of 2018. There are many different stories in that number: young families buying their first home, a teenager buying his or her first car, young adults going to college hoping to start a career and, yes, at least a few horror stories from those unfortunate people who do not handle debt responsibly and end up in bankruptcy court as a result. There are also many out-of-fault stories, including people who don’t have access to credit markets that would otherwise be much closer to their long-term financial and/or personal goals.

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But there is one common thread running through all those stories: a credit score. The way your story may or may not fit into the bigger picture of all American households’ debt can often be determined by that three-digit figure. Despite this crucial number playing such a big part in the interest you can expect to pay on a mortgage or personal loan, many Americans don’t know their credit score, let alone the kind of score they need to achieve their goals. reach.

That’s why GOBankingRates conducted a survey of 1,000 Americans to find out how much they know about their own creditworthiness and what kind of credit score they need to get different types of loans. The final results help paint a clearer picture of how Americans view their credit score and what they think that means. Keep reading to see how your credit score knowledge compares to the rest of the country.

Key findings

Here are some of the key highlights of the study results:

  • More than 35% of respondents did not know their credit score.

  • Spacious 4 in 10 respondents thought their credit score was good enough to achieve their financial goals.

  • At least a third of respondents said they did not know what level of credit score they would need for a mortgage (35%), a car loan (36%), a rewards credit card (39%) and a personal loan (41%).

Many Americans don’t know their credit scores

Despite the fact that your credit score plays such a vital role in your financial life, about 4 out of 10 respondents to the poll said they didn’t know what their credit score was. Of those who did know, about a third fell below a score of 740, with only 28% answering that they were above that level.

What is your credit score?

creditworthiness

Response rate

300-579

6.60%

580-669

11.50%

670-739

15.80%

740-799

16.80%

800-850

11.20%

I do not know

38.10%

Breaking those results down by age, there was a predictable tendency for younger respondents to not know their credit score, with 60% of those aged 18 to 24 answering, “I don’t know.” However, that age group is one of the least likely to take out a mortgage or car loan, so it’s understandable that many don’t know their score or have an established credit history. However, that response level doesn’t drop as far as one might expect for older Americans — the age groups of 35 to 44, 45 to 54, and 55 to 64 all had more than 30% of respondents responding that they didn’t know their credit scores.

Americans believe they have a strong enough credit score to achieve their money goals

There is not one number that everyone should target in their credit score; the right credit score depends on what you want to do with it. And that’s why just over 40% of respondents said they believed their credit score could adequately meet their financial goals.

Of the roughly 60% who didn’t think so, more than half answered that they didn’t know if their current credit score was high enough to meet their goals. That leaves about 1 in 4 respondents who knew their current credit rating was lower than it needed to be.

Do you think you have the necessary credit score to successfully achieve your financial goals?

Yes, my current credit score is good enough

40.30%

No, but my credit score is almost good enough

10.40%

No, I have a lot of work to do to increase my credit score

16.80%

I do not know

32.50%

Again, there is also a clear move towards better credit which is reflected in the age demographics. By age 55, nearly half of those surveyed felt their credit score was adequate for their jobs. However, it’s interesting to note that more than a third of 18- to 24-year-olds felt the same way, despite coming from a group less likely to have a long credit history to draw from.

“While our financial needs and circumstances change over time, it is still important to ensure that your credit report and score are maintained,” said Rod Griffin, director of consumer education at Experian. “Making sure you have access to credit and other financial resources is an important part of financial health.”

But do they really?

Whether those respondents accurately estimate the state of their creditworthiness can, of course, place their answers to that question in a new context. It’s possible that many people assume their credit score is where it needs to be, while underestimating the specific number needed to qualify for certain types of loans.

Survey respondents were as unfamiliar with the credit score required for various types of personal loans as they were with their personal credit scores. At least a third of respondents answered “I don’t know” when asked what the minimum credit score was needed to get a mortgage, car loan, rewards credit card, or personal loan.

In this case, that might be the most accurate answer – depending on who is making the loans, the minimum credit scores required will vary widely. However, based on data from the Federal Reserve on the typical credit score requirement, it is possible to compare the poll answers with what the general practices in the market are.

Mortgages

When asked about the credit score needed to get a mortgage, 26% of respondents selected the range 670 to 739, while another 15% believed that one would need at least a score of 740-799 and 16% said it could be as low as 580 -669. The Federal Reserve Bank of New York has the median score for mortgages of 759, meaning at least half of people start out lower than that. Given the survey’s findings, Americans seem a little more pessimistic than necessary about their mortgages. That said, the 16% who felt a credit score of 580 to 669 would work might need to adjust their perspective — only 10% of mortgages involve buyers with a credit score of less than 647.

car loan

About 24% of respondents felt the minimum credit score needed to get a car loan was between 580-669, while about 20% said it was 670-739. Just under 10% of respondents said 740-799 was needed, but for those folks, there’s good news: You probably don’t need a credit score above 700 to secure a car loan, as at least half of the car loans comes from lower scores than that. Even the 580-669 range is still within a normal range, according to the New York Fed. About 10% of the loans go to people with a score lower than 550.

How to increase your credit score and achieve your financial goals?

The fact that so many people are unaware of their credit score and what that could mean for their financial goals is disturbing. While some people are simply too averse to debt to ever take out a loan, for millions of other Americans, credit is a vital tool to help them live the lives they want.

And it is not difficult at all to find out your credit score. The major credit reporting agencies are each required to provide you with your credit report for free once a year. Although the report does not include a score, it provides all the information used to calculate the number. You can usually purchase a score for a nominal fee when you request your credit report. Credit scores are also free from a number of sources. For example, banks and credit card companies may provide free scores with your account statement. Often, you can subscribe to credit monitoring services for free that offer both free credit reports and credit scores. You can visit the website of companies such as Experian to discover a wide variety of other services available to protect your credit score and identity.

“A number of free services offer credit scores. A good example is Experian boost, a unique service that allows you to add positive information to your credit report to improve your credit scores. It gives you a free credit score when you start the enrollment process and another when you complete it to see the results and gives you control over the information you want to add,” Griffin said. “There are also apps and monitoring services that give you unlimited access. give you credit reports and scores so you can track your progress so you know when your credit is ready when you decide to apply.”

Even if your credit score isn’t what you want, there are lots of ways you can improve it. Paying your bills on time, every time, is the first step – after all, your credit history is the biggest factor influencing your score. You should also make sure to check your history for possible errors and have it corrected with the rating agency as soon as possible.

One of the most important factors influencing your credit score is your credit utilization rate – the percentage of available credit that you use. So paying off credit cards on your credit cards will improve your score significantly.

More from GOBankingRates

Last updated: November 8, 2019

Methodology: GOBankingRates surveyed 1,000 Americans ages 18 and older between August 14 and September 6, 2019 and asked six different questions: (1) What is your credit score?; (2) What is the minimum credit score you think you need to get a mortgage and buy a house?; (3) What is the minimum credit score you think you need to get a car loan and buy a car?; (4) What is the minimum credit score you think you need to get a credit card that offers rewards and/or cash back?; (5) What is the minimum credit score you think you need to get a personal loan from a financial institution?; and (6) In general, do you think you have the credit score necessary to successfully achieve all of your financial goals (e.g. owning a house)? GOBankingRates used Survata’s survey platform to conduct the poll.

This article originally appeared on GOBankingRates.com: Survey: Nearly 40% of Americans Don’t Know Their Credit Score — Do You?

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