MADISON, Wis. (7/23/12)--While many people are attuned to how much credit card debt they carry, nearly half of U.S. adults surveyed don't know what their credit score is--and that comes as no surprise to one credit union in Texas.
Mike Roark, senior vice president of lending/collection with $302 million asset, Dallas-based Neighborhood CU, told the Texas Credit Union League that he isn't surprised by the figure, because he often has to educate members about why a credit score is important.
If the credit union can't meet a member's current loan need because of credit, "we let the member know the specific reasons," he told the league (LoneStar Leaguer July 13). "The goal is to be able to meet the member's lending needs at some point in the future. In order to accomplish this, we must educate our members. It is imperative a member knows not only what their credit score is, but how to move their score in a positive direction," he added.
The online survey, conducted for Whiting, Ind.-based CouponCabin by Harris Interactive, interviewed 2,215 U.S. adults ages 18 and older. It found that U.S. adults--especially younger adults-- don't have a grasp on their credit score. Of consumers age 18-34 surveyed, 60% are significantly more likely to not know their score while 42% of those 35 and older don't know their score.
Those surveyed were much more likely to know how much credit card debt they have: 90% with credit card debt knew their total credit card debt, 10% didn't. Thirty eight percent reported having less than $1,000 in debt, while 21% owed $5,001 or more on their credit cards. Twelve percent said they owe $10,001 or more in card debt.
"While some credit card users report they are keeping their debt in check, others struggle with high interest payments and looming deadlines," said Jackie Warrick, president and chief savings officer at CouponCabin.com. More than one-third of those surveyed are concerned about how long it will take to pay off their cards, Warrick said.
Roughly 56% of respondents said they have two or more credit cards, while 35% have three or more, and 7% indicated they have six or more credit cards. Nearly half (47%) said they always or often use credit cards to buy everyday items like food, gas and personal items.
Consumers' disinterest in credit scores also indicates a disinterest in checking credit reports--the information that often contributes to one's credit score. An accurate credit report is important, and consumers have ample ability to dispute any errors on their reports, according to the National Foundation for Credit Counseling (NFCC) .
"An accurate credit report is critical to a person's financial future, and consumers need to be aware that the responsibility for reviewing their report lies with them," said Gail Cunningham, spokesperson for NFCC. "Even though consumers can obtain their credit report free of charge, the recent NFCC Financial Literacy Survey revealed that 62% of respondents had not ordered their report in the past 12 months."
Financial education is at the forefront of countering these trends, especially among the younger adults. Credit unions' efforts in financial education are making a difference, said the Texas Credit Union Foundation.
"Credit unions are well aware of the financial literacy problem in this country and have taken up the cause," said Courtney Moran, executive director of the foundation. "In addition to teaching financial education classes in their local schools and communities, credit unions are also opening in-school branches," she told the Texas league. "It will take time to move the needle, but I know it will move."