THERE ARE PLENTY OF THINGS MILLENNIALS ARE EXPECTED TO KNOW: how to use the latest technology, innovative ways to solve problems, the best angle for a selfie, even. But one study has just revealed that when it comes to credit scores, there's a lot the current generation still needs to learn.
The Consumer Federation of America and VantageScore Solutions L.L.C. recently unveiled their fourth annual survey on consumers' understanding of credit scores. The survey focuses on consumer knowledge of credit scores depending on demographics such as age and access to credit reports. The study finds that millennials (those between the ages of 18 and 34) know less about credit scoring than older credit card holders. For example, they know less about which businesses use credit scores. They also know less about who collects information on which the scores are based. In addition, many younger card holders are more likely to think credit repair companies can always or can usually be useful in correcting errors and improving scores.
"The primary reason millennials know so little about credit scoring is that they had no exposure to it during the first 18 to 21 years of their lives. You don't learn about credit scoring or credit reporting at any level of academia. And even after they've started building and using credit, the exposure to reputable and reliable information about credit scoring is very limited," says John Ulzheimer, president of Consumer Education at CreditSesame.com.
The Consumer Federation of America says a key reason for their lack of knowledge could be that millennials are less likely than older Americans to have obtained their free credit reports (49% vs. 74%). Consequently, they are less informed about how credit scores and reports actually work.
(1) If you're searching for answers about credit scoring, here are four things you need to know:
It's not just credit card issuers that use your credit score.
When asked which of six types of businesses (from credit card issuers to landlords to cellphone companies) might use credit scores, only 18% of millennials, compared with 32% of older consumers, correctly identified all six. In addition to credit card companies, credit scores are used by utility companies, cellphone companies, home insurers, landlords, and mortgage lenders.
"Most people realize credit card companies and auto lenders use credit scores but they don't realize they are also often used to determine homeowner or auto insurance...