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Credit score a mystery to many consumers

Is someone’s age going to stop them from getting a top-notch credit score? Will whether you’re married, divorced or single be figured into the calculation of a credit score? Does race influence the score?

Far too many consumers give the wrong answer and say ‘Yes’ to those questions. Many incorrectly believe that a person’s age, marital status or ethnicity can boost or ding a credit score, according to a survey of consumer knowledge of credit scores.

Why’s that a problem?

“These consumers may well think it’s not worth the effort to improve their credit scores,” said Stephen Brobeck, the executive director of the Consumer Federation of America.

He may have a point. If you think factors beyond your control heavily influence credit scores, you may not be as diligent about paying bills on time.

A second annual survey of credit score knowledge was released last week by the Consumer Federation of America and VantageScore Solutions, whose credit-scoring model was created by America’s three reporting agencies.

In spite of gaining more knowledge in some areas, consumers still don’t completely understand credit scores. The survey showed:

• More than half think a person’s age and marital status are used to calculate credit scores.

Beep, wrong answer.

When it comes to age, though, the age of an account may influence a score. It may help boost a score to have a credit card account open for several years.

When it comes to whether you’re married or not, a joint credit card could influence a score, too. If your spouse charges too much or doesn’t pay the bills, for example, your score would be hurt if you’re on a joint account.

Co-signed accounts for auto loans, student loans, and credit cards could impact a score — depending on whether the bills are paid on time and if too much money is being borrowed.

• About one in five incorrectly believe that ethnic origin is used in calculating a credit score. Again, race and ethnicity aren’t calculated into a credit score.

“One of the strengths of credit scores is they only measure use of credit,” Brobeck said. “It doesn’t measure your skin color or your age or your gender.”

A credit score is designed to give lenders a way to measure the risk that a loan to a given borrower won’t be repaid.

Consumers can boost scores by consistently paying bills on time every month; holding down borrowing; avoiding even coming close to maxing out a credit card; paying down debt rather than just moving it around to new accounts for lower rates, and not opening many new accounts rapidly.

As college graduates head out into the job world this spring, it’s also important to realize that excessive amounts of student loan debt could hurt credit scores.

If a college grad becomes overwhelmed and gets behind paying bills, it can slam a credit score pretty hard.

“Can they realistically pay that once they get out of college?” asked Barrett Burns, president and CEO of VantageScore Solutions.

College grads may have been singularly focused on grade point averages for years, but their focus has to move to the credit score, said John Ulzheimer, president of consumer education at in Atlanta.

“New college grads will soon move into a new apartment, maybe even buy a car, open a new credit card or two,” he said.

But their access to credit — and ultimately the rates they qualify to get — will be in part based on their credit score.

“They’ll get a crash course in the importance of that 3-digit number,” Ulzheimer said.

The level of college loan debt — and how it could impact credit scores — remains a point to consider for high school seniors heading to college, too.

By now, many consumers know very well that a lower credit score drives up the cost of borrowing.

But again what does that really mean? How much extra money are we talking about? Many consumers do not know.

Only 29 percent of those surveyed were aware that a borrower with a low credit score is likely to pay at least $5,000 more over the life of a five-year, $20,000 car loan than someone with a high credit score.

The question is part of a test on credit scores at

Greg McBride, senior financial analyst for, noted that in today’s rate environment borrowers with good credit can snag auto loan rates of 3 percent or lower.

At 3 percent, for example, the monthly car payment would be $359.37 and the total interest paid would be $1,562.43 on that five-year car loan for $20,000.

But if the rate climbs up to 12 percent, as it could with a low credit score, the payment would go to $444.89 a month and the total interest would be $6,693.34.

“The difference between good credit and bad credit is integral in whether you get approved for a car loan, and on what terms,” McBride said.

To be sure, there are other circumstances that lenders might consider when granting a car loan or making other loans, too.

A lender, for example, might take into account if a consumer has a higher down payment on a car as a way to override a credit score that’s too close to a cutoff for a certain rate on a car loan.

A credit score does not tell the entire story.

But it’s good to dispel myths, understand the financial costs of a low score — and find legitimate ways to boost that credit score over time.