NEW YORK – Many Americans have a love-hate relationship with their credit cards – and half of their credit cards save their lives. A survey of 2,000 people with poor, unknown, or no credit found that most Americans struggled with their finances when they first moved on their own (56%).
Almost three in five respondents say that one of the hardest steps to becoming an adult was learning how credit works (58%).
The results also show that two in five people (41%) believe that there are not enough resources available to them to help them learn about credit. More than half of those surveyed (58%) want a manual they can refer to to help answer questions about credit.
What is credit anyway?
Driven by OnePoll from Opportune, the survey found that people are most likely to get credit information from the Internet (52%) or banks (37%). Although 35 percent prefer to get their information straight from the source – credit card companies – most people think companies over-complicate credit by using jargon or small print limitations (59%).
Although the average person currently has two credit cards opened, nearly a quarter of Americans (24%) think credit card companies don’t make it easy to open a new card. The most common reasons credit card companies prohibit people from getting a credit card are because they don’t have enough credit history (35%), have too much debt (35 %) and not having enough income (34%).
“We estimate that there are 100 million people in the United States who are effectively excluded from the mainstream because they have no credit score or have been badly rated by major bureaus. For many people, this is an infuriating trap: how can I create credit when no one is going to lend me money to create credit? “Said Matt Jenkins, COO and GM of Personal Loans at Oportun, in a statement. “The good news is that some lenders are now using technology and alternative data to make responsible credit available to people without a score. “
Risk of monthly payment by credit card
In addition to trying to open credit cards frequently, the survey finds that there may be other habits at play that affect Americans’ credit scores. Those with credit cards have taken an average of two cash advances, which is likely to lower their score a bit. One in five do not make payments on their credit card every month (21%) and 43% choose to pay only the minimum amount owed.
Surprisingly, nearly a quarter of credit card holders admit to paying less than the minimum amount owed or not making any payments (24%). Many don’t realize that when you pay that also counts; respondents with credit cards made an average of two late payments in the past year.
More than two in five find it difficult to keep up with the credit cards they own (44%) and a similar amount admit they are so in debt they don’t even know where to start to pay them off (41%) . Although 54% feel confident in understanding how to build good credit, the survey finds Americans still fall into the trap of credit myths.
The myth of “good” credit
Half of Americans mistakenly identified credit scores below 670 as “good credit.” Almost one in four people still think that checking their credit report will lower their credit rating (24%) and 18% believe that closing a credit card will increase their credit rating when it does. opposite.
One in five people think that as long as their debt is paid off, their negative history, including late payments or missed payments, will be erased (21%). The same amount is also mistakenly believed that credit scores are the only thing lenders consider.
“A credit score has more of an impact than the amount you pay in interest, it can also determine what types of jobs you can do, where you can live and more,” Jenkins explains.
“Consumers who find themselves with little or no credit should look for responsible lenders, those with APRs below 36%, who will report their payments to the credit bureaus. By making payments on time and in full, consumers can quickly begin to earn the good credit scores they deserve, which will open up new avenues to better financial results.