Most people know how their consumer credit reports are used by creditors, but many still do not know the major credit bureaus, what constitutes a strong score or what the ramifications of a poor score are, according to a recent quiz conducted by the Consumer Federation of America.


Consumers did not know that a credit score mainly reflects the risk of not repaying a loan, nor did they know that age and marital status are not factors in calculating a credit score. The majority of respondents also did not know that numerous web-based sources, not just FICO and the three main bureaus, offer generic credit scores.

"The good news is that a large majority of consumers know the key factors used to
calculate scores and the creditors who use these scores," said CFA Executive Director Stephen Brobeck. "The bad news is that consumer knowledge has lagged behind recent changes in the credit score marketplace," he said.

Beginning in July, the government will require greater disclosure of credit scores, which can help individuals maximize their participation in the marketplace, said Barrett Burns, president and chief executive officer of VantageScore Solutions, which conducted the survey with CFA.

"The new score disclosures will be most beneficial to those who understand the new
credit score marketplace," Burns said.

Credit rating agencies all use their own scoring criteria, so individuals have many different credit scores that may be good or bad, depending on their relation to other scores from the same source. The report advised that consumers should comparison shop for credit, since major lenders have different credit scores they may assign different risks. People with poor credit scores who may not qualify for a traditional loan can seek alternative financing through a payday or car-title loan.

Misunderstanding or misinformation surrounding credit scores can prevent consumer or small business attempts to borrow money, The Detroit Free Press reports.

Individuals seeking financing should know that they can save money, regardless of their credit score, by shopping around for a loan. The amount of available credit a small business or consumer has won't hurt the credit score, but the amount of debt carried on a corporate card or loan will damage the rating.

Paying off a big debt won't automatically boost a score either, the newspaper reports. Tax liens are one thing that can seriously damage a credit report and still hurt a score after the debt has been paid.