Steady decline in credit score knowledge.

A topic we cover in this newsletter often is that credit scores and credit scoring models have always been labeled a black box. As an industry, we need to double down on consumer education because consumers who are properly educated are empowered to make better decisions.

This is one of the reasons we value our partnership with Consumer Federation of America (CFA), one of the largest and most influential consumer advocates in the country.

Along with CFA, we survey consumers annually to understand what they understand and do not understand about credit scoring — and how important it is to their financial health.

Detailed results of this year’s survey are included in this month’s newsletter, but, to put it mildly, the historical results of a comparison of surveys from year prior leaves much to be desired. From a knowledge standpoint, we are going in the wrong direction.

Baseline knowledge about credit scoring has steadily declined over the past eight years.

Our mission is more critical now than ever before. Millennials are now the largest generation by population size, according to the Pew Institute, and have a lighter footprint in credit activity compared to older workforce age groups. Fewer than 60% of Millennials are regular users of credit. Lenders, by the way, are going to have to become more comfortable lending to this generation with less credit activity than prior generations without subordinating prudent lending standards.

We must also recognize that low-to-moderate income consumers were disproportionately impacted by the Great Recession and many still find themselves with credit health challenges.

Indeed, in this country, approximately 42% of consumers have scores below Prime. A healthy economy has contributed to an overall improvement in average consumer credit scores, but many families and individuals have lingering financial hurdles to deal with.

Part of the solution is to provide educational opportunities so that consumers can take the right actions, whether they are new to credit or trying to work back from a low credit score.

That’s why we continue to believe in tools like Tens of thousands have benefited from taking the quiz but we’ve only reached a small percentage of the overall population.

We encourage all those with social media profiles to share this website with their followers.

The URL is and there is a corresponding version translated into Spanish at

We do not sell anything on these websites, nor is any personal information required or captured. This is a resource that is completely free of any commercial interests.

As I mentioned, please read on for survey results, as well as articles about VantageScore 4.0, credit scores and dating, and a Q&A with Gerri Detweiler, a personal finance expert who specializes in helping small business owners achieve their entrepreneurial dreams.


Barrett Burns

Findings from the new consumer survey

The ninth annual credit score survey, released today by the Consumer Federation of America (CFA) and VantageScore Solutions, LLC, shows that consumer knowledge about credit scores is at the lowest level in the past eight years. On most knowledge questions (as the table and charts show), correct scores declined by more than ten percentage points, and sometimes by more than 20 percentage points. For example:

  • 78% of respondents in 2012, but only 62% in 2019, correctly indicated that people have more than one credit score.
  • 85% in 2012, but only 66% in 2019, correctly answered that keeping a low credit card balance helps raise a low credit score or maintain a high one.

However, in the same period, the proportion of respondents who said they considered their knowledge of credit scores excellent or good rose from 54% to 60%.

“Consumers know less about credit scores but think they know more,” said Stephen Brobeck, CFA senior fellow. “Taking our online credit score quiz provides an easy way for consumers to update their credit score knowledge,” he added. More than 230,000 individuals have taken the Credit Score Quiz, developed and maintained by CFA and VantageScore.

“We are pleased that many consumers now have free access to their credit scores, but consumers must also take advantage of all the additional information about credit scores and credit files in order to make better credit decisions,” said Barrett Burns, president and CEO of VantageScore Solutions.

Consumer knowledge levels may have deteriorated, in part, because of improvements in the overall economy and consumers’ financial condition. In 2012, large numbers of Americans faced challenging credit card and mortgage debts, so consumers may have been especially concerned about credit scores. Since then, as the nation’s economy and family finances recovered, and as consumers reduced unsustainable credit card and mortgage debts, consumers may have felt that it was less important to fully understand credit scores. Reports of increases in average credit scores nationwide may also have lessened people’s feelings of financial vulnerability and the need to fully learn about their scores and its impact.

Despite overall rising score levels – now averaging 680 according to Experian – a large minority of consumers have fair or poor scores (below 670). Low scores can especially harm these people by:

  • Denying them access to needed credit.
  • Increasing the costs of consumer and mortgage credit they can obtain. Subprime auto loans will likely cost several thousand dollars more, and subprime mortgage loans can cost over ten thousand dollars more, compared to conventional loans.
  • Increasing deposits required by utilities and cell phone companies to obtain service.

Low credit scores also are an indicator that people may have difficulty obtaining a job. While credit scores themselves are not used by employers, the credit reports the scores are based on are frequently utilized. “Those with low credit scores should be aware that they are at risk not only for paying higher costs for credit and utility services, but may also struggle to obtain a good job with which to afford those higher costs,” noted CFA’s Brobeck.

While consumers’ knowledge of their actual credit scores has declined overall, the latest survey shows large majorities of consumers did correctly answer key knowledge questions related to important facts:

  • Mortgage lenders and credit card issuers use credit scores (83% and 82% respectively).
  • Missed payments are used in calculating credit scores (86%).
  • Making all loan payments on time helps a consumer raise a low credit score or maintain a high one (87%).

However, significant minorities of respondents did NOT know other key facts, for example:

  • Cell phone companies might use credit scores in pricing services (41%).
  • Borrowing from a 401k retirement account or paying a parking ticket late will not lower your credit scores (30% and 22% respectively).
  • Opening several credit card accounts at the same time might lower scores (38%).
  • Frequently checking credit scores will not lower their scores (38%).
  • Checking the accuracy of one’s credit reports is very important (33%). Lenders may have provided inaccurate information or failed to supply accurate information to credit bureaus; thus, the bureaus may have made mistakes such as adding information to the wrong file of a person with the same name.

In brief, consumers can raise their credit scores or maintain high scores by:

  • Consistently making loan payments on time every month. A late payment may lower one’s credit scores by dozens of points.
  • Using a small portion of the credit available on a credit card. In general, the higher the percentage of credit line that is drawn down, the lower one’s credit scores.
  • Paying down credit card debt rather than just shifting it to another credit card or to a home equity loan.
  • Regularly checking one’s credit reports to make sure they are error-free. This can be done for free annually by going to or by calling 800-322-8228.

The survey was conducted by the Engine Telephone CARAVAN survey, who on April 25-28, 2019, interviewed 1,002 representative adult Americans by landline or cell phone. The survey’s margin of error is plus or minus three percentage points.

Historical Results


Credit-scoring tools vs. reality today

In today’s environment, lenders need to continue to innovate and adapt. The lending industry is facing challenges with the possibility of a cycle change and increasing competition from all sides of the marketplace including the tech sector.

As described in a new model overview, the VantageScore 4.0 model offers significant benefits over conventional models by utilizing better data and more innovative model development techniques to score millions of consumers that were previously “unscorable”. Using this model, which includes trended credit data and machine learning, 241 million consumers are now scorable, including 40 million who could not be scored by other conventional models.

Conventional models tend to rely heavily on a consumer’s depth, breadth, and tenure of credit. VantageScore 4.0 goes beyond these factors to look at the trajectory of borrow behaviors over time, which reveals additional insights into consumer credit behavior.

Recent advances in computer power and machine learning algorithms are making it possible to look for deeper insights in data. The VantageScore 4.0 model can identify relationships between data that provide additional correlation on a borrower’s likelihood of default. This has value in cases with the previously “unscorable” consumers who may have a limited credit history or a lack of recent credit history.

VantageScore Solutions firmly believes in transparency and the importance of knowledge sharing. It is the only credit score model developer to publish detailed results of its annual model assessments along with communications aimed at model users and consumers. To read the full article, click here.

How to discuss money with your date

(BPT) – Should you ask someone their credit score on a date? There’s actually an online dating app that’s based on one’s credit score. Maybe it’s not a bad idea.

Apparently, members of the Millennial and Gen Z generations agree. With student loan debt at an all-time high, it’s understandable that young adults are more willing to discuss finances than previous generations — even on the first date.

According to a Bankrate survey, Millennials are nearly twice as likely to feel comfortable discussing money with a romantic partner — even sharing credit scores and exchanging stories about debt.

Young adults today are coping with the largest burden of student debt than any previous generation, plus stagnant wages and often limited support from parents who may have been hit hard by the recession. It’s no wonder money is on their mind — and an important consideration when choosing a partner.

If you’re a Millennial or Gen Z, what do you need to know about finances? Here are ways to determine if the person you’re dating has a responsible attitude when it comes to debt, credit and finances.

Are they a responsible borrower?

When discussing where you went to school, it’s very common to bring up the subject of student loans and how you’re coping with debt. As they say, misery loves company. You each can share tips and resources that have worked for you. Create a bonding moment out something you both may be struggling with and learn a few tricks along the way.

Are they living within their means?

One way to cope with debt is to make sure you’re not taking on more. Perhaps after you’ve dated after a little while, you may feel safe to bring this topic up. This is something you may be able to subtly pick up in conversations along the way. This is a two way street, you must be open sharing your saving plan, goals, and debt situation. Being the first person to share can help your partner feel more at ease.

Do they know and understand their credit score?

Your credit score reveals how potential lenders see you. Did you know that traditional credit score models don’t take into account the fact that Millennials and Gen Z may have higher assets and income, but are reluctant to take on more debt due to their student loan burden, and so may reflect less credit history? A story in USA Today reported this last year.

A fun tip to share with your date: the VantageScore model assesses younger borrowers more fairly. Over 2.5 billion VantageScore credit scores were provided directly to consumers last year, and you — and your date — can get your free credit score at

Do they think about the future?

Your date may be surprised when you ask how they imagine their retirement, but this can be a great indicator of their financial mindset. If your date sports a flashy wardrobe but gives no thought to the future — or assumes they’ll be wealthy enough to retire at 50 with no current plan — they may not be thinking it through. See if they have similar retirement goals and outlook as you. Keep the conversation light and breezy. You’re just getting to know each other and it’s ok if they have a different financial mindset than you. You can only control your own actions.

Knowing how someone handles their finances can be an indicator of their maturity level and their character. Do they take responsibility for their obligations, or are they just winging it? How far you decide to commit to the relationship may largely depend on what you discover about their attitudes toward money.

Understanding your debt situation is the first step toward planning for the future.

For more information and helpful tips, check out the VantageScore podcast at

Five Questions with Gerri Detweiler

Gerri Detweiler, Education Director for Nav, a free marketplace that matches entrepreneurs to financing options.

1. Over the past few years at Nav, you’ve focused on helping small business owners and entrepreneurs navigate the waters of“Feb2018” credit and financing. What is the number one question you get the most?

I’ve been educating consumers on consumer credit scores for many years, and the questions I get now about business credit are those I’ve heard about personal credit. The most common question I get is, “What’s a business credit score?” In fact, Nav’s American Dream Gap Survey found that about half of all business owners are unaware they have a business credit score, much less how to check or build theirs.

Although commercial credit reports have been around for a long time — Dun & Bradstreet began in the mid 19th century — there simply is not the same awareness about commercial credit as there is with personal credit. Part of the reason is that there are significantly fewer disclosure requirements; a business owner may not know why her application was turned down, much less the credit data behind the decision.

2. These days, people often freelance and startup businesses on the side of their “nine-to-five.” When should people to turn their side gig into their main gig? Any advice?

Starting a business can be hard, and it often takes longer to be successful than many entrepreneurs anticipate. At the same time however, it’s never been easier to start a business, and many do so on far less money than might be expected.

My advice to anyone thinking about turning their side gig into their main gig is to get a mentor. Find another person you trust that’s a small business owner — they don’t have to be someone in the same type of business as you — and ask them tough questions, share your concerns and pick their brains on what works and doesn’t work. Having someone who has gone through the trials and tribulations of being a small business owner before you can be a real asset, especially when you start to encounter various challenges. Another great way to find a mentor is through your local SCORE office or Small Business Development Center (SBDC). Both offer free consulting to small business owners.

Remember, there may never be a perfect time to make the leap from employed to self-employed. A side business can be a great way to test the waters and develop the myriad skills it takes to successfully run a business so you can go out on your own with confidence.

I was self-employed for more than a decade myself and I essentially started that way, by writing my first book while I was still working full-time. When I went out on my own, I had enough consulting and freelance writing work lined up to replace my previous income.

3. At what point does an entrepreneur need to start thinking about and improving her or his business credit score? How does that differ from consumer credit scores?

It takes time to build a business credit profile and strong business credit scores, just as it takes time to build strong personal credit scores. I recommend entrepreneurs start the process as soon as possible. If you wait until you need it, you may miss out on important opportunities.

Business credit data can be used for purposes similar to personal credit, including financing and insurance applications, for example. But unlike personal credit, anyone can check your business credit without your knowledge or permission. That means your business credit may be checked by potential business partners, suppliers, or customers.

Even your competitors may check your business credit. Nav’s CEO and Co-Founder Levi King learned this the hard way in his first business, a sign manufacturing business. He lost out on a bid for a lucrative job and his business credit report was a major factor in that decision. At the time, Levi didn’t know anything about commercial credit reports, and didn’t realize his business credit report contained negative information. He had purchased the manufacturing equipment of another business and the credit bureau treated it as if he had acquired the entire business, not just those assets.

4. How does an entrepreneur establish a business credit score? Do they need one to start a business or can they use their personal credit score? How do the two differ?

Business owners should take the time to check, monitor and build strong personal and business credit. According to the 2019 Federal Reserve Small Business Credit Survey of employer firms (1-499 employees), 13% relied only on their business credit, 45% relied only on personal credit, and 41% relied on both.

At Nav, customers with a free account can view and monitor their business credit data from Experian, Dun & Bradstreet, and Equifax as well as their personal VantageScore based on credit data from Experian. (Premium accountholders also see a VantageScore based on TransUnion data.) We believe both strong personal and business credit scores are important in order to have access to the widest range of financing options.

Ultimately our goal at Nav is to improve the small business borrowing experience for both applicants and lenders. Through the company’s Enterprise Solutions, partners can integrate more than 110 business financing offers, API-powered credit alerts, bureau reports, and cash flow data into an existing platform or a customized product of their choosing. Nav’s one-stop-shop financing marketplace can be configured to improve customer engagement and retention, serve underfinanced small business customers with no additional risk and create new or additional revenue streams for partners.

You establish business credit like you do personal credit: by getting accounts that report. The challenge is that there is much less data consistency with commercial credit than with personal credit, so it’s not unusual for businesses to find that some accounts they pay faithfully aren’t showing up on some (or any) of their business credit reports.

Two easy ways to get started: get vendor accounts with companies that report payments to commercial credit agencies and get a small business credit card. Most small business credit cards report to at least one of the major business credit agencies.

At Nav we’ve also partnered with eCredable, which charges a nominal fee to verify and add bills the business is already paying — such as utility bills or a cell phone used for the business — to their business credit report.

Tip: Entrepreneurs who purchase an existing business should always check that businesses’ credit first as it will likely carry over after the purchase.

5. And in contrast, what advice to you have for homeowners thinking about tapping into their home equity to start a small business?

Many businesses rely on personal credit and savings to start their business, and that may include include home equity loans, savings, retirement funds or personal credit cards. Sometimes you just do what you have to do. However, your goal should be to build a profitable company and move away from using personal credit as soon as possible.

Starting a business is risky and lenders know that. If a lender isn’t willing to take a risk on your startup you may want to approach it with similar caution. That doesn’t mean you shouldn’t try, but if you are putting significant personal assets at risk, perhaps you can start your business slowly on the side rather than go all in, particularly if it’s not a business where you have extensive experience.

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