Last month we posted a fun quiz on the blog section of myFICO to test how well people know their credit. The quiz consisted of 10 questions about credit, credit scoring and lending practices — some of the questions had multiple answers for a total of 15 points if one answered all questions correctly.
First, thanks to the thousands of people who spent 5 minutes (that was the average time it took to complete the questions) taking the quiz. We were pleasantly surprised by the results, and we think you might be, too. Either the quiz was too easy or a lot of “credit smarty pants” folks visit the myFICO blog!
- 10% of responders got all 15 questions 100% correct.
- 17% missed just one answer.
- 40% only missed two or three of the answers.
Questions that most people got right:
- Almost everyone knew that a 750 is considered a very good FICO® Score by most accounts and that the three national credit reporting agencies are Equifax, Experian and TransUnion.
- 80% knew that your income is not considered by a FICO® Score. However, it is important to note that lenders will often use income along with FICO® Scores and other information when making credit decisions.
- 91% knew that a low FICO® Score doesn’t mean you’ll never get credit. Many lenders have credit products designed for individuals with blemished credit histories and a FICO® Score is dynamic and can increase as information in your credit report changes and/or ages.
Questions where confusion still exists:
- About 50% of responders thought having a 30% utilization ratio on credit cards generates maximum points. Not true. Generally speaking, the lower revolving utilization the more points awarded. I think the confusion is that people see that the category Amounts Owed makes up about 30% of a FICO® Score and interpret that as meaning that a 30% revolving utilization ratio results in the optimal amount of points generated.
- 12% of responders answered that closing down a credit card would have a positive impact on a FICO® Score. Not true. Closing down a credit card account will not increase your score – and may even cause it to decrease as it could cause your revolving utilization to look higher.
- A lot of the responders thought that FICO® Scores are used in setting the premium on homeowners insurance and/or in new hire employment screening processes. Not true. Many insurance providers do leverage credit information in their insurance granting decision process — but not FICO® Scores which are designed to predict credit risk, not insurance risk. And while it is true that companies may employ a credit check on new hires, they are only accessing the credit report — not credit scores.
These results are promising as we engaged in April’s National Financial Literacy Month. Having a deeper understanding of your credit, credit score and how lending works can help you make better credit related decisions and potentially save thousands of dollars in interest rates and fees. For the remainder of the week, we’ll be posting quiz insights, financial tips and more to celebrate Financial Literacy Month. We encourage you to share content and engage and help us spread the word about the importance of financial and credit education.
The quiz is still accessible if you are interested in testing your knowledge — or simply visit the Learn about Scores section of myFICO to get your burning credit and credit score related questions answered.