Credit Score Knowledge Declining
One of the important ways that financial services firms can “lean in” to economic injustice is to level the playing field when it comes to financial literacy. VantageScore Solutions is again pleased to partner with Consumer Federation of America (CFA), one of the nation’s largest and most influential consumer advocay organizations, to address a continuing issue: the lack of knowledge about credit scoring.
Last year’s survey indicated that knowledge was declining. And unfortunately, the 2020 survey shows there are still important knowledge deficiencies; which if left unchecked, can be harmful for a consumer seeking access to credit.
Obviously this isn’t the news that we wanted to share but it starkly reminds us of the importance of producing and supporting tools that help address these knowledge gaps.
It is more important now than arguably any time in our company’s history. Unemployment remains at a historic high while, at the same time, the employment rate plunged to its worst in the past 50 years. Consumers are signaling distress. One indicator is a monthly survey that is conducted by TransUnion, which is one of the owners of VantageScore. On a monthly basis, TransUnion surveys 3,026 adults in partnership with 3rd party research provider Qualtrics® Research-Services. Respondents are asked a number of questions about their financial health and the results are comparable month to month.
According to TransUnion, in the sixth month of this study, over half (57%) of Americans say that they continue to be impacted financially by COVID-19.
What’s more: financial hardship has disproportionately affected some specific consumer segments. Generational differences remain stark, as younger generations are more impacted (Gen Z: 67%, Millennials: 68%) than older generations (Gen X: 55%, Baby Boomers: 39%). Households with children are more likely to report hardship than those without (68% vs. 44%).
As of the end of July when the survey took place, impacted consumers estimate they have 5.9 weeks until they will be unable to pay their bills. However, those who indicated they would not be able to pay within one week increased to 14%. From 9%.
Income is clearly a factor as well. 80% of households with income less than $50,000 are concerned about paying their bills, while 64% of higher-income households (>$100,000) express similar concerns.
Income inequality, and the wealth and housing gaps are issues we must address if we are to have a society where everyone has the same opportunities. In order to achieve that goal, the financial services industry and consumer advocates must partner and pursue solutions.
Financial literacy has to be part of that package.
This quiz and the website provide critical information about how credit scores work and what they do for consumers. We think everyone, whether they are above the age of 18 and credit-eligible or in high school but in need of preparatory financial literacy, should take the quiz. And while we are glad so many people have done this, we’re only scratching the surface. Please share the website with your constituents and if you are on social media, we hope that you can share this information with your followers.
Thank you, and we hope you remain healthy and enjoy the rest of the summer!
CEO and President, VantageScore Solutions