Credit Score Impact Unclear to Most: Survey

The vast majority of Americans do not know that a bad credit score is more than just a barrier to getting a loan – it may also keep you from getting the job you want.

A new survey released by Visa USA shows that only 20 percent of Americans know that it is legal for employers to refuse to hire job applicants with low credit scores. Fully 52 percent of Americans mistakenly believe it is illegal for prospective employers to use credit scores as a hiring criteria and another 28 percent of survey respondents are unsure.

Visa’s survey also found that 42 percent of consumers 18 and older have never even checked their credit score and therefore can not know if they have a bad or good score. Men are significantly less likely to check their credit score, as are people over 55 years old.

"Credit scores have become the de facto ‘GPA’ for all aspects of modern life because they can affect everything from getting a job to being able to buy a house," said Jason Alderman, director of financial education for Visa USA. "A bad credit score can send an otherwise well qualified job applicant straight to the unemployment line."

Many employers have made checking a credit score a mandatory part of the job application process, just as drug testing and criminal background checks are now common requirements for jobs in many industries.

Additional key findings of Visa’s survey of 1,000 adults nationwide include:

More women (59%) have checked their credit score than men (51%).

Adults age 55 and up have checked their score at a far lower rate (43%) than those under 55 (62%).

Only 22% check their credit score once a year.

A small group of just 18% check their score two or more times each year.

Visa released the survey results as part of a significant effort by the company to improve the financial literacy level in America. A major component of this educational initiative is Visa’s What’s My Score (www.whatsmyscore.org) program, a free personal finance resource for college students and young adults.

What’s My Score explains and demystifies credit scores for college students and provides free information on how young adults can improve their scores. In addition, a wide variety of resources help students learn the basics of financial management, including: budgeting, saving, paying for college, buying a car, getting a first job, protecting their identity and critically evaluating different loans. There are also comprehensive materials available to assist college professors and administrators in teaching students about these vital financial life skills. All of the resources on What’s My Score are provided at no cost.

Some key credit score tips provided by What’s My Score include:

Stick to your budget and pay all of your bills on time

Keep your credit card balance low in relation to your available credit

Make more than the minimum payment on your credit card and other loans

Don’t open a lot of new accounts over a short period of time, especially if you have a short credit history

Pay off credit card debt rather than moving it around to other cards

Review your credit report regularly for errors and know your credit score: A free online tool to estimate your current credit score is available at www.whatsmyscore.org/estimator

In addition to What’s My Score, Visa also runs the Practical Money Skills for Life program (www.practicalmoneyskills.com), an award-winning, teacher-tested and teacher-approved financial education program that is available in English, Spanish and Chinese. The program contains three comprehensive sections, complete with money management resources and lesson plans tailored for use at home, in the classroom or at work. It also contains an array of tips to help prepare for life changing financial events, from planning for a baby to saving for college and retirement, as well as a number of other budget calculators and interactive games.

Additionally, building on a decade-long commitment to improving the financial literacy of all Americans, Visa USA has joined with personal finance expert Jean Chatzky. A best-selling author who appears regularly on "The Oprah Winfrey Show" and "The Today Show", as well as hosting a daily radio program on Oprah & Friends (XM 156), Ms. Chatzky is collaborating with Visa to promote financial literacy nationwide through a number of Practical Money Skills for Life and What’s My Score outreach activities.