Many consumers misinformed about personal credit score data

A significant portion of U.S. consumers are misinformed about the nature of their credit scores. This lack of understanding may be a factor in recent credit trends, especially as consumers tighten their finances and grow wary about where to place their debts. Consequently, these activities likely play a role in the revenue potential of debt collection and accounts receivable specialists. According to a report released this week by credit service FreeScore.com, nearly half of surveyed U.S. consumers - 47.2 percent - mistakenly thought that lenders, instead of consumers themselves, have the most control over their credit scores. Even more - 64.7 percent - thought the economy could impact their credit scores. However, a significant majority of respondents - 80.8 percent - understood that they are in control of their credit scores and can influence them by following financial "best practices," such as proper spending and credit usage and living "within one's means." "The fact is that lenders and the general state of economy - good or bad - have little to do with an individual's credit scores," FreeScore reported in a statement. "Factors that may impact a person's credit scores include the amount of credit outstanding, repayment history, length of credit history, debt-to-credit ratio and number of new credit accounts opened - all within an individual's control." This is important to debt collectors because improper handling of credit may influence the amount of demand in the industry. It's true that credit scores are now receiving greater scrutiny than they were just a few years ago, due mainly to the fact that a larger pool of consumers are refinancing, applying for new mortgages and seeking alternative forms of credit. Also, due to the higher number of foreclosures and bankruptcies in recent years, particularly because of the housing crisis, lenders have grown more concerned about consumer credit scores, factoring them more heavily in their loan decisions. "In many cases, only consumers with the best credit scores are approved for certain loan types and preferred interest rates," FreeScore added. "Consumers with poor credit and lower credit scores - individuals that arguably have the most to gain from obtaining a loan and better rates - can find it more difficult to secure the financing they need."