Survey finds one-third of Americans don’t check their credit reports

The COVID-19 pandemic has had a financial impact on Americans in many ways. Reports emerged in June 2020 in light of the pandemic, people were looking to change their spending habits to save more money and put themselves on a healthier financial track. This suggests people want to take better charge of their finances, which typically would include monitoring their credit reports.

Interestingly enough, while Americans want to improve their financial standing, a new report suggests only one-third of Americans have checked their credit reports over the past year, despite a rise in credit card fraud occurrences during the pandemic. Not knowing what’s on a credit report can be counterproductive to being on a strong personal finance track.

Most Americans don’t check their credit

According to CompareCards, a website that helps people compare credit card options, only 33% checked their credit reports in the past year. CompareCards, which has been conducting this annual survey for the last three years, said this is a drop from both 2019 (39%) and 2018 (37%).

Federal law ensures Americans have the right to check their credit reports once per year from each of the three primary credit reporting agencies for free through the website annualcreditreport.com. During the COVID-19 pandemic, this rule was temporarily changed to allow consumers to check their credit reports once per week. Yet, despite the opportunity to frequently monitor their credit reports, most people don’t because they either choose not to or aren’t aware of the ability to weekly check for free.

Are consumers becoming numb to data breaches and ID theft?

The CompareCards survey also found credit cardholders are taking fewer actions to prevent ID theft than they were a year ago, despite 47% of cardholders being notified their PII (personally identifiable information) was exposed in a data breach within the last year. However, the survey did find many do check for signs of identity theft may have occurred.

Experts suggest a lack of action may be partially due to data breach fatigue. Unfortunately, data breaches, even massive ones, have become so commonplace in the last 10 years, people have perhaps begun to grow numb to them. Some consumers may feel they can’t control their data so why worry. Others may simply have tuned out with numerous news reports of data breach incidents.

Pandemic fatigue may also be a barrier. Experts speculate people may be distracted by COVID-19 effects which prevent them from checking their credit. People have had to worry about job loss, economic uncertainty, along with concerns if they’ll be able to pay their bills next month. As a result, they’ve become so focused on resolving these and other pandemic-related issues, concerns about identity theft may be falling through the cracks. Experts say this is a mistake since criminals could be actively ruining their credit without their knowledge.

Importance of checking credit reports

Times are tough, but financial experts continue to routinely suggest consumers should check their credit reports several times a year now that it’s free, but at a minimum, once per year. This way, consumers can quickly identify any discrepancies immediately. Sometimes reports contain errors but other times inaccuracies may be a warning sign identity theft has taken place, especially if new accounts suddenly appear on a credit report.

If any flaws or suspicious entries are found, consumers want to get to the bottom of it right away before these incorrect entries hurt their credit score and credit standing. Unfortunately, identity thieves often do significant damage by the time the theft is discovered and, as a result, a person’s credit score is ruined.

Consumers do check their credit scores

While consumers may not be monitoring their credit reports, the good news is they are routinely checking their credit scores. According to a USA Today report published in February 2020, over 50% of American consumers check their credit scores at least once a month. For people who are struggling to maintain a good credit score, but want to better their numbers, this is an important first step. Even people with good credit scores should routinely check to see where they stand in case they slip, allowing them to take steps to boost their numbers back up again.

How to maintain a good credit score

To maintain a stronger credit score, it’s important for consumers to recognize any negative tendencies or bad financial habits. For instance, they should:

• Follow credit reports to quickly identify errors.
• Strive to end making consistently late payments of credit cards and bills.
• Limit applications for new credit.
• Make a goal to keep credit balances low to obtain a good credit utilization rate (CUR).
• Maintain a credit card for the long-term, even if only seldomly used.
• Prevent credit cards from going inactive.

Consumers who are unbanked or underbanked may find difficulties gaining access to credit which hinders their ability to build a good credit score. However, they do have options, such as pursuing an alternative credit score.

Benefits of an alternative credit score

Many consumers are unable to achieve a traditional credit score. Some don’t have bank accounts while others have low credit scores and find it hard to improve their number. An alternative credit score is a great option for someone in either scenario.

An alternative credit score enables anyone, even consumers considered to be “high-risk” to be appropriately scored by paying their regular bills on time. This process allows them to prove their creditworthiness because they demonstrate responsibility in making regular payments to bills traditional credit score models don’t track. As a result, they can gain access to credit so they can buy houses, cards, take out loans, or be approved for credit cards.

PRBC is committed to helping consumers with low or no credit gain access so they can enjoy the same financial benefits other consumers enjoy. To learn more about how we can help you build creditworthiness, or if you have any questions about our alternative scoring process, contact us today.