Americans have massive credit score misconceptions, study shows
About 20 percent of people said they would give up alcohol for a score of 800
While Americans know their credit score is extremely important to their financial lives – a majority don’t appear to know what goes into it.
According to a new study from CompareCards, 62 percent of Americans did not know the main factor that determined their three-digit score was their payment history. As previously reported by FOX Business, for the average individual’s payment score typically accounts for 35 percent of their overall score.
Millennials and Generation X were less likely to know the correct answer when compared with older generations.
WHAT FACTORS DETERMINE YOUR CREDIT SCORE?
There are a number of factors that are taken into account when your credit score is calculated, and among each person, the weight placed on each category will be different based on things like the length of an individual’s credit history.
The other factors besides payment history that are considered include amounts owed, length of credit history, credit mix and new credit.
The average American had other common misconceptions about their credit scores, too. For example, more than 40 percent of people incorrectly thought checking your credit score too often would damage it.
REFINANCING: WILL YOUR CREDIT SCORE TAKE A HIT?
But about two-in-ten respondents said they would give up alcohol for the rest of their lives if it meant getting an 800 credit score forever.
According to Experian, the average FICO score in the second quarter of last year was 703, though the average scores tended to vary by age. Americans between the ages of 20 and 29 had the lowest average score, 662, compared to people aged 60 and over, whose scores averaged 749. The state with the highest average credit score as of the second quarter – 733 – was Minnesota.
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The average FICO credit score reached 704 in 2018, according to a report released by the scoring company, an all-time high.
As previously reported by FOX Business, there were some common methods used among people who were able to raise their score by more than 100 points over the course of a year – including reducing debt and improving on-time payments, among other things.