The biggest news this week is all about what consumers don’t know about their credit.
40% of Americans Don’t Know Credit Scores Impact Credit Card Rates
A new study by the Consumer Federation of America and VantageScore Solutions shows that many Americans don’t understand the full impact of their credit scores.
The study revealed that 40% of Americans didn’t know their credit score impacted their credit card rates and 42% didn’t know that their credit score could cost them more on their mortgage.
Additionally, many respondents in the survey thought — erroneously — that some factors like age and marital status impacted their score.
How Important Is Your Credit Score?
Our Director of Consumer Education Gerri Detweiler explains the importance of credit scores when it comes to applying for credit.
Having bad credit can result in a lower interest rate when you apply for almost every type of financing — car loans, mortgages, credit cards, even personal loans. So it’s important to understand that maintaining a positive credit history can save you no small amount of money.
Most Homebuyers Clueless About Mortgage Basics
While many consumers may understand the importance of their mortgage, there are some simple aspects of mortgages that consumers don’t realize.
A new survey from Zillow shows that more than one in three Americans don’t fully understand what an APR means. Most conflated it with a regular interest rate, not realizing that an APR better encompasses the true cost of a mortgage including points, insurance, and other fees that can be included in the cost of obtaining a home loan. It is for this reason that APRs are often somewhat higher than interest rates quoted to would-be borrowers.
Image: NS Newsflash, via Flickr