Who Checks Your Credit Score?

Jul 23, 2013 by


range of credit scores“My credit score doesn’t matter. I’m not planning to borrow money anytime soon.”

Credit Score Quiz

Can you find at least three problems with the common consumer sentiment above? My answers below; you may have others.

Credit Score Mania Doesn’t Mean Consumers Understand Credit

Despite credit score mania, seems consumers generally are poorly informed about how and when credit scores are used.

I recently ran across the infographic below on CreditCards.com. On the left are six creditors or service providers. The percentages indicate the portion of consumers who knew—in a survey of 1,022 adult Americans done by the Consumer Federation of America and VantageScore Solutionsthat the entities on the left may check consumer credit scores.

CreditCards.com infographic: Who is checking your credit score?
 

The first number that jumps out at me is that 42% of those surveyed apparently didn’t know that mortgage lenders check credit. Wow—we’ve really got an enormous need for financial education in the U.S.! “So you want to borrow $100k? Sure, no problem, you look like a fine upstanding person so no need to check your history of on-time payments or whether you filed for bankruptcy last week.” Sorry for the sarcasm, but geez….

My Answers to the Quiz

So what are the problems with this statement?

My credit score doesn’t matter. I’m not planning to borrow money anytime soon.”

  1. That word “planning” makes me nervous. How often does reality differ from your plans? An unplanned need or desire to borrow may come up.
  2. “Soon” also troubles me. Many don’t realize that negative information may legally stay on your credit report for 7 years. A bankruptcy can be reported for 10 years. That’s longer than “soon” to me.
  3. As the infographic shows, more than lenders check your credit score. You could be turned away by a landlord due to poor credit. A utility company may require a fat deposit. And an insurer may jack up your premium or turn you down for coverage based on your credit.

The bottom line is that most businesses either won’t do business with people who have poor credit or they’ll charge them more or require that they put down security (a deposit). Maybe that’s unfair in some cases, but that’s the way it is.

Are You Surprised by the Survey Results?

What do you find most surprising in the survey? Be honest—did you know all of the entities listed may check credit scores? Do you know of other common service providers that check credit that aren’t listed?

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