Consumer Survey Reveals Key Relationship between Financial Confidence and Credit Scores

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01/26/2023 - 09:00 AM

A new survey from FICO uncovered that U.S. Consumers’ feelings about their credit scores are strongly linked to their financial well-being

SAN JOSE, Calif.--(BUSINESS WIRE)-- Highlights

U.S. consumers feel the toll of the current economic landscape: One-third report that they feel financially insecure and 43% say that the unstable economy is a barrier to achieving financial goals.
Managing credit can be a beacon amongst uncertainty: 85% of U.S. consumers feel more secure in the rest of their lives when their credit score is healthy. Learning about the right steps to manage credit can help people feel more in control of their finances and well-being.
Understanding credit looks different across generations: One in five Gen Zers say that they only understand credit scores a little or not at all, compared to Boomers (96%), who are more likely to say they completely understand credit scores.

Today, global analytics software firm, FICO (NYSE: FICO) released the results of a national survey, Credit Scores Uncovered: Consumer Relationships with their Scores, which unveils new findings about how people feel about their credit scores in relation to their financial well-being.

The survey asked U.S. adults to assess their views of their credit scores in the current economic landscape to understand how credit scores play a role in feelings of financial security. As Americans set their financial goals for 2023, the survey highlights the challenges and opportunities for people to improve their credit education. 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.

“Knowing that access to credit is a key building block for achieving financial goals it’s easy to understand why credit scores would be a significant factor in overall well-being,” said 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. Millions of consumers rely on their FICO Score for their financial future, and we don’t take that responsibility lightly.”

Credit Education Looks Different by Generation

While the majority (90%) of Americans say that they at least somewhat understand what a credit score is, the survey findings shed light on a gap in knowledge in understanding how to maintain or improve their credit, as only 37% check their scores monthly. Given the importance of consumers actively monitoring their credit to stay informed and maintain accountability, a lack of knowledge in this area could deter some people from reaching their credit goals.

This knowledge gap is more prevalent amongst Gen Zers, as one in five reported that 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 only 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%).

Setting 2023 Financial Goals

Americans across generations appear hungry to learn more about credit education this year, as 84% agree that they have the power to influence their credit score. As they set out to revamp their financial goals this year, it is important to know the difference between credit scores and FICO® Scores, as FICO Scores are used by 90% of top U.S. lenders.

“As you commit to your financial goals this year it’s helpful to keep a target FICO Score in mind to keep yourself on track as you progress on your credit journey,” said Taylor. “The good news is your FICO Score is dynamic and it changes with your credit behavior, so your FICO Score today doesn’t have to be your FICO Score tomorrow.”

It is important to know to check the credit score used by most lenders, FICO® Scores, as Americans of all ages set their financial and credit goals this year. Whether setting a goal to buy a new home, finance a new car or open a new credit card, people will need to keep their credit in shape as they consider these life decisions. Three tips for people looking to improve their FICO Scores include:

Pay your bills on time.
Be careful to not take on debt that you do not need or may not be able to afford.
Check your FICO Score regularly.

There are several ways people can monitor their FICO® Scores. Hundreds of lenders are participating in the FICO® Score Open Access program to provide FICO Scores to consumers for free; many people who receive their monthly credit card bill will find their FICO Score is included on the statement. People can also visit myFICO.com to get their FICO Score and learn more tips to manage their credit journey.

Survey Methodology

This CARAVAN survey was sponsored by FICO and conducted by Big Village among a sample of 2,011 adults 18 years of age and older. This survey was live from November 30 through December 4, 2022.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail, transportation and supply chain, and many other industries. Using FICO solutions, businesses in nearly 120 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of rental cars are in the right place at the right time.

Learn more at http://www.fico.com.

Join the conversation at https://twitter.com/fico & http://www.fico.com/en/blogs/.

For FICO news and media resources, visit www.fico.com/news.

FICO is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.