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Financial Literacy - Credit scores
Credit ignorance expensive mistake
Our national poll reveals consumer failure to monitor personal credit.
Credit scoring, demystified

One-third of nation flying blind with credit

Mistakes on credit reports can be costly, and not only when shopping for a mortgage. Our latest national poll reveals that 32 percent of Americans surveyed say they never check their credit reports, meaning they have no idea whether the information on their reports is correct. Considering the fact that reports often contain inaccuracies, there’s a large chance that tens of millions of Americans are throwing money away needlessly each month.

Information contained in credit reports is the base off of which credit scores are compiled, and the financial repercussions of having a less-than-ideal score are far-reaching: The blissfully unaware might be paying too much for auto or home insurance and carrying credit card balances, among other things. They may even miss out on job opportunities or housing because of mistakes.

"There are lots of ways to be unpleasantly surprised. The point is you don't know until you look."

"If you don't check you have no idea there's an issue until something unpleasant happens to you," says professor Michael Staten, director of the Financial Services Research Program at George Washington University. "And with rates, you may never know if you're paying too much."

Not checking your credit reports makes it impossible to know if your credit score, which is comprised of information from your credit reports, is fair. When uninformed consumers take out loans, they pay for the mistakes on their reports.

How often do you check your credit report?

Source: Bankrate.com 2007

"Without knowing what's in their credit report, consumers are flying blind in terms of what to expect anytime they go out and apply for credit. This is especially important now with the shift to risk-based pricing," says Staten.

"Now you don't get turned down for credit, you just get charged more."

Credit mistakes cost everyone
Even if you don't think of yourself as someone who uses credit, your credit score can affect the rate on your auto insurance and  sneak up on you in other ways, impacting cell phone policies and apartment rental agreements.

"There are lots of ways to be unpleasantly surprised. You could discover identity theft. The point is you don't know until you look," says Staten.

-- Posted: June 18, 2007
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