Magazine article American Banker

Many Don't Know Credit Basics

Magazine article American Banker

Many Don't Know Credit Basics

Article excerpt

Many consumers are inadequately informed about credit reports and scores, and many support stronger federal protections, according to a survey the Consumer Federation released Monday.

"A surprisingly large number not only don't understand the basic facts about credit reports and credit scores, but admit that they don't understand these facts," said Travis Plunkett, the group's legislative director, who is scheduled to testify on the subject at a Senate Banking Committee hearing today.

Half of those surveyed claimed to have "fair" or "poor" knowledge of credit reports, and over 60% claimed fair or poor knowledge of credit scores. The figures were even higher for those in low-income brackets and for adults under 24.

The vast majority of the participants said they were aware that consumers have the right to see their report and that those who do not qualify for a loan are entitled to a free report. But most said they were unaware that a credit card application can lower a credit score, or whom to contact to correct errors.

"We need the federal government playing a major role," Mr. Plunkett said. "We have to focus on financial education that actually changes behavior."

As if on cue, Sen. Paul Sarbanes of Maryland, the committee's ranking Democrat, introduced a bill that would create an intergovernmental coordinating committee to be led by the Treasury secretary that would develop a national strategy within a year to promote financial literacy. …

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