Higher Credit Scores Provide Emotional Comfort

Higher Credit Scores Provide Emotional Comfort

FICO study: While credit scores empower users to secure loans or get better interest rates, some people view them almost like a test, and an “A” grade provides security.

SAN JOSE, Calif. – Global analytics software firm FICO released the results of a national survey, Credit Scores Uncovered: Consumer Relationships with their Scores.

While credit scores are used for financial lending decision, the study looked more at the emotional impact of a credit score by asking U.S. adults to assess their views of their credit scores to understand how credit scores play a role in feelings of financial security. It also shows generational differences in how people perceive credit scores.

According to the survey, 85% of Americans feel more secure in the rest of their lives when their credit score is healthy. At a time when one-third of Americans report that they feel financially insecure, and 43% say that the unstable economy is a barrier to achieving financial goals, the survey results suggest that learning about the right steps to manage credit can help people feel more in control of their finances and well-being during uncertain times.

“It’s easy to understand why credit scores would be a significant factor in overall well-being,” says Sally Taylor, vice president and general manager, FICO Scores. “Learning how to achieve healthy credit habits can help people gain access to the credit they need to reach their financial goals, like get an education, cover medical expenses, or buy a first home.”

Credit education by generation

A large majority (90%) of Americans say they at least somewhat understand what a credit score is. But not that many know how to maintain or improve their credit, and only 37% check their scores monthly.

This knowledge gap is more prevalent amongst Gen Z. One in five say they only understand credit scores a little or not at all, and 29% said they either do not have a credit score or do not know if they have one compared to 8% of boomers.

On the other hand, boomers feel more secure in their finances and are the most likely (96%) to say they completely or somewhat understand credit scores, followed by the Silent Generation (94%), millennials (92%) and Gen X (91%).

Originally published by Kerry Smith in Florida Realtors

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