It’s entirely possible that companies you don’t even do business with know more about your credit score than you do.

According to a new survey, most consumers do not have the slightest idea what credit scores measure, what good and bad scores are, or, how their credit scores can be improved.

The survey, which was administered by the Opinion Research Corporation International and paid for by the Consumer Federation of America and Providian Financial, asked more than 1,000 a range of questions about credit scores.

The results are a bit horrifying both in terms of what consumers don’t know and the misinformation they believe about their credit history and credit score.

For example, most consumers understand that mortgage lenders use credit scores, but less than 30 percent know that electric utility companies pull scores. Nearly half of those surveyed knew that landlords and home insurers often use credit scores to decide whether to rent to or insure a particular homeowner or renter – and at what price.

Just a third of consumers understand that credit scores give lenders a sense of how risky you are as a borrower. Having a high credit score indicates a consumer understands how to manage credit and is a lower risk for defaulting on the loan than someone who has a low credit score.

Few consumers understand what constitutes a good score. Only 12 percent recognized that having a score in the low 600s is a cut-off point. Below that, you might be rejected for credit or have to pay higher sub-prime interest rates and fees. Just 13 percent of those surveyed correctly connected having a score in the low 700s with getting approved for a loan with the lowest rates.

“It is meaningless to know your score if you don’t know whether it is good or bad,” said Steve Brobeck, executive director of the Consumer Federation of America.

More than half of all consumers believe that a married couple has a combined credit score. In fact, each person has his or her own credit score. If you and your spouse apply for a home loan, both credit scores will be pulled and the lender will consider each score before deciding what kind of interest rate and fees to charge.

“You cannot raise your credit score by marrying someone with better credit,” said Alan Elias, a senior vice president with Providian Financial.

What goes into your credit history? If you pull a copy of your credit score, you’ll find identifying information like your name, address, Social Security number, date of birth and employment information. You’ll also find all of your credit accounts listed (this is called a “trade line.” Lenders report each account you have, the date you opened the account, credit or loan limit, the account balance and payment history.

When a creditor wants to know about your credit, he or she pulls a copy of your credit history. This is called an “inquiry,” and the inquiries section of the report contains a list of everyone who has accessed your credit history in the past two years. Finally, credit reporting bureaus also collect public record information from state and county courts (including bankruptcies, foreclosures, lawsuits, liens and judgments) and overdue account information from collection agencies.

Your credit score takes all of this information and translates it into a number that ranges from around 500 to 900. Each of the different factors translates into a different part of your credit score.

According to the website (a partnership between Equifax, a credit reporting bureau, and Fair Isaacs, the company that created credit scoring), whether you pay your bills on time or late accounts for 35 percent of your score; The amount of debt you owe on all of your credit accounts makes up another 30 percent of the score; The length of your credit history and how long you have had individual pieces of credit total 15 percent of your credit score; How much new credit you have been approved for and how many recent inquiries are on your credit report account for 10 percent of your score; Finally, the various types of credit you are managing, including mortgage or home equity loan, car loan, school loans and credit card debt, account for another 10 percent of your credit score.

What doesn’t factor into your score? Your face, color, religion, national origin, sex, age, marital status, salary, occupation, employment history, where you live, or whether you are participating in credit counseling a debt management program.

While it takes less time to damage your credit history than to fix it, the good news is you can raise your score without doing much more than paying your bills on time every month. also recommends keeping your balances low on credit cards and other revolving credit products, like home equity lines of credit. If possible, pay off your balances as quickly as possible. And, you should apply for new credit accounts sparingly.

The other thing you can do to keep your credit score as high as possible is pull a copy of your credit history at least once a year. You can go online to each of the three major credit reporting bureaus (, 800-685-1111;, 800-888-4213; and, 888-397-3742) or go to and get a copy of your credit history and FICO score at the same time.

If you find an error, report it immediately to the credit reporting bureau. The bureau has 30 days to investigate the error. If it can’t be substantiated, it will be removed from your credit report.

How long does it take to raise your credit score? Depending on what’s gone wrong in your financial life, experts say you should see a substantial improvement 12 months after you start paying your bills on time.

“Now that credit scores are increasingly used by utilities, insurers and employers, as well as creditors, it is essential for consumers to learn their score and what it means,” said Brobeck. “The cost of not knowing your score and its significance could be not only denial of credit, but also difficulty obtaining needed services and even a job.”

Published: Oct 1, 2004