A survey recently released, in part by the Consumer Federation of America, shows that consumers are getting smarter about their credit scores and credit in general. As a matter of fact, the number of people who checked their credit score at least once in the last year has increased to 57% compared to 49% four years ago.1 Are you one them?
Why are more people checking their credit scores?
There are many reasons why people are more interested in learning the “ins and outs” of credit scores. According to the survey, some of these reasons include:
- Online access and the media. With instant online access to your credit score and the media coverage about credit, more people are becoming interested in the subject and are starting to search for their scores.
- Free credit scores. Certain institutions, including some credit card companies, offer their customers free credit scores. Highlighting the topic of credit, and then providing a credit score at no charge, generally piques the interest of many consumers.
- People are more “credit” savvy. Those consumers who have checked their scores over the last year seem to know more about credit. Why? One possible reason is that companies who offer credit scores typically provide explanations as to what makes up the score and why it might be high or low.
- Saving money. Along with a better understanding of credit comes the realization that higher credit scores can translate into better rates on loans. This can save a consumer thousands in interest payments over their lifetime.
Along with consumers checking their scores more often, they are also learning how to use credit correctly. As with credit scores, obtaining credit information online instantaneously enables people to learn the “dos and don’ts” of credit before making any potential mistakes.
5 of the most critical credit lessons consumers can learn are:
- Different cards for different people. Not all credit cards are the same. A card that’s right for one person might not be right for you. Research credit cards carefully before applying for one so you know that it’ll fit your needs over a long period.
- Good credit goes a long way. Whether you’re buying a house, purchasing a car or just filling out an application for cell phone service, the better your credit, the more likely you are to get accepted (and to be offered a lower interest rate).
- Credit isn’t cash. It’s easy to pull a credit card from your wallet and use it as you would cash. The problem is that the credit card bill has to be paid off or else interest accrues and penalties can begin. Think twice before using plastic instead of paper. It could save you a lot of headaches and money down the line.
- Debt happens gradually. It often occurs so subtly, we don’t even know it’s happening. We pay with one credit card here… another credit card there… take a loan out from this bank… use part of our home equity line of credit for a home project. Before we know it, we’re in debt and not even sure how we got there.
- Want a lower interest rate? Just ask. If you have a good credit score (700 or better) or if you’ve increased your credit score since the last time your credit card company set your interest rate, you can always call them to negotiate a lower rate. The less risk they perceive, the less they may charge you for interest.
Being a myFICO member means you’re either very credit savvy, want to keep up to date on the latest credit “trends” or both. When it comes to credit, see what other members are learning at the myFICO forum.