These days, many consumers know the importance of maintaining a strong credit score by having healthy borrowing habits. However, almost half of adults are unaware of some of the basics that go into making up that rating, or what that score is.
In all, 47 percent of adults said they do not know what their credit score is, but this problem was especially pronounced among younger consumers, according to a new survey from Harris Interactive conducted on behalf of the savings site Coupon Cabin. Of those between the ages of 18 and 34, 60 percent did not know their credit rating, compared with just 42 percent of those aged 35 and up.
Part of the problem with these results is that some consumers are simply unaware of many aspects of their finances, the report said. About 10 percent don’t know how much credit card debt they’re carrying, and 21 percent said they were carrying more than $5,001. Further, 56 percent of borrowers have two or more credit cards, another 35 percent have three or more, and 7 percent said they had six or more.
“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 Coupon Cabin. “In fact, more than one-third of people we surveyed said they are concerned about how long it will take to pay off their cards. Keep your swiping in check and always have a grasp on the number of cards you have and how you’re using them.”
If you want to figure out what goes into your credit report, try the Credit Report Card – a free tool that lets you see which parts of your credit file are weighing down your score so you can fix the bad habits.
Bad credit habits can often contribute to significantly diminished credit scores. This will have two negative effects on consumers’ finances. First, they will likely face appreciable increases in the amount they pay for the accounts they have through added interest charges. Second, the amount they pay for any new accounts they choose to seek out will likely be significantly increased because lenders view them as a higher risk. That is, if they are able to qualify at all.
Lending to subprime borrowers has increased significantly in the last several months, but at the same time, these accounts generally cost borrowers far more than those they might have access to if their credit ratings were healthier.
Image: Iragerich, via Flickr