Despite alternative credit scoring initiatives from JP Morgan Chase, Wells Fargo, and US Bank, the traditional credit scoring system isn’t going away anytime soon, and consumers want help figuring out how to better manage and improve their scores. .
Consumers today believe that a good credit score and an established credit history are essential for successful results.years and credit cards. PYMNTS research found that nearly two-thirds (62%) of consumers want to improve their credit rating but don’t know how to do it. This even includes consumers who have above average credit scores. For example, those with above-average credit scores don’t know whether having one or more lines of credit is better for their scores, or they don’t know how to spend close to their credit card limits. credit affect their ratings.
the Knowledge of credit score and construction credit report, a collaboration between PYMNTS and Momentum (a division of US Bank), explores consumers’ perceptions and plans for improving their credit scores. We surveyed a balanced sample of 2,053 consumers in the census and found that they are interested in and value credit card issuers, which provide tools to both monitor and improve their credit cards. credit scores.
The survey found that consumers have a false confidence in the level of their credit rating. More than two-thirds believe their scores are above average, nearly double the true proportion. Seventy percent of consumers surveyed believe their credit scores are “above average,” but only 45 percent have ratings above 751, the above average score based on national data from credit. At the same time, only 8% of consumers think their credit scores are “below average,” even though 21% have ratings below 600, the actual range of below-average ratings.
The perception gap narrows for consumers with an average credit score, or between 600 and 700, because 19% of consumers think they have average credit, and in fact 29% do. Gen Z and paycheck consumers have the largest gap between perception and actual score, at 33 percentage points each between the share of them reporting an above-average credit score and those who do. actually do. These gaps indicate a lack of knowledge and a need for better credit education.
In terms of credit card possession, consumers have an average of two credit cardsage, baby boomers, seniors, and high-income consumers having more, with 2.3 and 2.5 cards each. Gen Z has only one on average. Only 24% of consumers do not have a credit card issued.
Access to credit scoring tools influences consumers’ choice of credit cards. Thirty-seven percent of consumers would be at least “somewhat” likely to switch to cards offering credit score enhancement tools, and 18 percent would be “very” or “extremely” likely to do so. More than half (57%) of consumers would consider tools to monitor or improve their credit scores “very” or “extremely” important when choosing a credit card. Only interest rates (66%) and rewards (77%) are cited more often.
These results touch only a few of the ideas presented in our research. To learn more about consumers’ perceptions and their plans to improve their credit rating, Download The report.