Credit score uncertainty

Is someone’s age going to stop them from getting a top-notch credit score? Will whether you’re married, divorced or single be figured into the calculation of a credit score? Does race influence the score?

Far too many consumers give the wrong answer and say “yes” to those questions. Many incorrectly believe that a person’s age, marital status or ethnicity can boost or ding a credit score, according to a survey of consumer knowledge of credit scores.

Why’s that a problem? “These consumers may well think it’s not worth the effort to improve their credit scores,” said Stephen Brobeck, the executive director of the Consumer Federation of America.

A second annual survey of credit score knowledge was released last week by the Consumer Federation of America and VantageScore Solutions, whose credit-scoring model was created by America’s three reporting agencies.

In spite of gaining more knowledge in some areas, consumers still don’t completely understand credit scores. The survey showed:

More than half think a person’s age and marital status are used to calculate credit scores.

Wrong answer. When it comes to age, though, the age of an account may influence a score. It may help to have a credit card account open for several years.

When it comes to whether you’re married or not, a joint credit card could influence a score, too. If your spouse charges too much or doesn’t pay the bills, for example, your score would be hurt if you’re on a joint account.

Co-signed accounts for auto loans, student loans and credit cards could impact a score, depending on whether the bills are paid on time and if too much money is being borrowed.

About one in five incorrectly believe that ethnic origin is used in calculating a credit score.

A credit score is designed to give lenders a way to measure the risk that a loan to a given borrower won’t be repaid.

Consumers can boost scores by consistently paying bills on time every month; holding down borrowing; avoiding even coming close to maxing out a credit card; paying down debt rather than just moving it around to new accounts for lower rates, and not opening new accounts rapidly.

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As college graduates head out into the job world, it’s important to realize that excessive amounts of student loan debt could hurt credit scores. If a college grad becomes overwhelmed and gets behind paying bills, it can slam a credit score pretty hard.

College grads may have been singularly focused on grade-point averages for years, but their focus has to move to the credit score, said John Ulzheimer, president of consumer education at in Atlanta.

By now, many consumers know very well that a lower credit score drives up the cost of borrowing.

But again what does that really mean? How much extra money are we talking about? Many consumers do not know.

Only 29 percent of those surveyed were aware that a borrower with a low credit score is likely to pay at least $5,000 more over the life of a five-year, $20,000 car loan than someone with a high credit score.

A credit score does not tell the entire story.

But it’s good to dispel myths, understand the financial costs of a low score and find legitimate ways to boost that credit score over time.