Credit reports still a mystery, GAO finds
"While consumers are very aware of credit reports and scores, many don't understand factors that negatively impact their financial report cards, according to a report issued by Congress Wednesday.
Most consumers don't know their scores can be used for insurance or employment decisions, the report also says, and a scant 6 percent of consumers know the Federal Trade Commission is the agency to turn to if they have a run-in with the credit reporting agencies.
The report also found that Hispanics understand their credit rights far less than whites or blacks.
The report, "Credit Reporting Literacy: Consumers Understood the Basics but Could Benefit from Targeted Educational Efforts," was issued late Wednesday by the General Accounting Office. It was mandated by the 2003 FACT Act, best known to consumers as the law which gave them a free copy of their credit report every year. Consumers were surveyed last year, before free credit reports took effect.
"At some level we were pleasantly surpassed that people had a general notion about credit reports," said Richard Hillman, one of the study's authors. "But their awareness levels quickly dropped off," when asked more specific questions about their credit reports, he said, such as how long negative information remains on a credit report, or how the dispute process works. Only half knew that using all their available credit -- being close to the credit limit on several credit cards -- lowered their credit score. And nearly three-quarters didn't know that credit reporting agencies must investigate disputed items for free."
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Most consumers don't know their scores can be used for insurance or employment decisions, the report also says, and a scant 6 percent of consumers know the Federal Trade Commission is the agency to turn to if they have a run-in with the credit reporting agencies.
The report also found that Hispanics understand their credit rights far less than whites or blacks.
The report, "Credit Reporting Literacy: Consumers Understood the Basics but Could Benefit from Targeted Educational Efforts," was issued late Wednesday by the General Accounting Office. It was mandated by the 2003 FACT Act, best known to consumers as the law which gave them a free copy of their credit report every year. Consumers were surveyed last year, before free credit reports took effect.
"At some level we were pleasantly surpassed that people had a general notion about credit reports," said Richard Hillman, one of the study's authors. "But their awareness levels quickly dropped off," when asked more specific questions about their credit reports, he said, such as how long negative information remains on a credit report, or how the dispute process works. Only half knew that using all their available credit -- being close to the credit limit on several credit cards -- lowered their credit score. And nearly three-quarters didn't know that credit reporting agencies must investigate disputed items for free."
Read more from MSNBC
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