Despite a firestorm of controversy surrounding large banks over the past year - not to mention a massive surge in support for credit unions - consumers tend to place more of their trust in banks, according to a study released this week by FreeScore.com. The report found roughly one-third of surveyed trusted banks the most, and less than 1 in 3 trusted credit unions the most. However, more than one-fifth of respondents - 22 percent - claimed to have not known their credit scores before applying for a home mortgage loan. "While trust of lenders is a factor, consumers must approach lenders prepared," said Carrie Coghill, director of consumer education for FreeScore.com, in a statement. "It means knowing your credit scores before you seek a mortgage. Knowing your credit scores and information is key to understanding if you qualify for the best rates." Lenders and employers alike have placed heightened importance on consumer credit
data in recent years, as soaring debt levels have plagued investor returns and stalled spending activity. These trends have also driven up demand for debt collection
services. Government lending institutions and mortgage bankers were viewed as the least trustworthy, according to the survey. Less than 10 percent of respondents claimed they prefer these lending institutions over others, which is interesting considering a majority of banks and credit unions sell a large portion of their loans to public companies such as Fannie Mae or Freddie Mac. Consumers tend to view the entities that actually receive their initial loan application as the actual lender - be it a bank, credit union or government agency. Still, it seems a large percentage of consumers have largely unfavorable views of creditors as a whole, as the collapse of the housing and financial markets that led to the recession was driven in large part by aggressive credit practices, foreclosure activity and subprime lending trends. More than 20 percent of respondents cited "none of the above" when asked to choose which lending entity they preferred to deal with. "It is imperative consumers check and monitor [their credit] scores, in addition to ensuring their credit information from each of the bureaus is correct," Coghill added. "It takes just one bad score for a lender to reject a loan. Misinformation in your credit report can also impede your ability to secure a better rate. So, before you trust a lender, put trust in yourself first to know your financial situation."