Consumers Found Unaware Of Credit Score Use

Credit scores affect not only the consumers' ability to borrow money from lenders and at what price, but also their ability to purchase insurance and other products, receive utility service, and even rent an apartment, said Stephen Brobeck, Consumer Federation executive director.

The federation, based in Washington, D.C., is a non-profit association of 300 individual consumer groups, with a combined membership of more than 50 million people.

In the new survey conducted in February, Mr. Brobeck's group found that many consumers had a poor understanding of credit scores and how to raise them.

The survey discovered, for example, that only half of the 1,000 adult respondents answered correctly that scores only represent credit risk, not factors such as available credit or consumer debt levels.

Almost half of those surveyed incorrectly said that a higher salary or a large inheritance would raise credit scores. Mr. Brobeck pointed out that while increasing one's income or wealth may indirectly raise one's score, only the consumer's credit history directly affects the score.

Mr. Brobeck, during a conference call discussing the survey result, advised consumers to "pay their bills on time, keep their credit balances low, and take out new credit only when they really need it" to improve their scores.

Also, consumers should take advantage of their ability to check their credit reports for free to make certain that the data in their credit reports, the basis for credit scores, is accurate, Mr. Brobeck recommended.

"In addition to one's annual income and net wealth, credit scores are becoming the most important financial number in people's lives," he said.