The Importance of Credit Score Literacy and Building Credit Report

The past year has been a rollercoaster for many people’s finances, with credit scores taking a hit due to various factors such as unemployment, stimulus money, and lockdown living. As a result, the spotlight is now on financial literacy and wellness, with new financial yardsticks needed to navigate these uncertain times.

A recent study conducted by PYMNTS in collaboration with Elan, a division of U.S. Bank, delved deep into the topic of credit score literacy and building credit reports. The study surveyed over 2,050 consumers and found that 70 percent of them believe their credit scores are “above average,” while only 45 percent actually have scores over 751, which is considered above average according to national credit reporting data.

Despite this discrepancy, the study also found that there is widespread consumer support for efforts to improve credit scores and credit worthiness. In fact, 62 percent of consumers expressed a desire to raise their scores, with a significant portion indicating a high level of interest in doing so.

Millennials and bridge millennials are particularly keen on improving their credit scores, with 57 percent and 58 percent, respectively, expressing a strong interest in doing so. These demographic groups are taking proactive steps to improve their credit health, such as making timely bill payments and keeping their credit usage low.

One key strategy that many consumers are employing to improve their credit scores is choosing the right credit cards. The study found that one-third of millennials and bridge millennials would be highly likely to switch to credit cards with credit score improvement tools. This rate is almost twice the corresponding share of consumers overall, highlighting the importance of credit education and score monitoring tools when choosing a credit card.

Overall, the study concludes that there is a rising tide of credit score awareness among consumers, with more people treating their credit scores with care to strengthen their finances and the financial system as a whole. As the pandemic continues to impact people’s finances, the importance of credit score literacy and building credit reports has never been more apparent.