Credit Score Articles

Americans More Financially-Savvy, But Less Likely to Take Action

The period following the recession left many Americans eager to educate themselves about their personal finances and boost their money management skills. While education usually results in improvement, a new report shows that this may not be the case when it comes to consumers' financial habits. Lending Club, a popular peer lending network, released a survey revealing that more Americans are well-versed in financial matters, but continue to sit idle when they have the opportunity to improve them.

According to the study, 83 percent of Americans know their credit card interest rates. However, 64 percent of consumers are paying too much for them - an interest rate of 14 percent or higher. A surprising 65 percent of survey respondents have not attempted to negotiate a better rate with their lender and an alarming 93 percent know they can, but choose not to.

Financial professionals find the statistics disturbing, as Americans appear nonchalant about paying more than necessary without putting up a fight.

"Knowing what to do is only half the battle," Family Financial Network founder and Lending Club chief consumer advisor Jennifer Openshaw said. "Americans need to wake up, take responsibility and take action. The fact that people are paying 20 percent or more in interest is outrageous when alternative loans are available and credit card companies are willing to negotiate. With a few smart moves, anyone can improve their credit scores, get better interest rates and build their bank accounts."

Despite the strong role a consumer's credit score plays in securing a loan, low interest rates, insurance and even employment, 31 percent of respondents admitted they do not know their credit score.

Following the economic collapse and subsequent recession, more Americans gained awareness of the significance of having a strong credit score when they attempted to obtain loans and credit cards. Others may have been disappointed to learn, in the midst of unprecedented layoffs, that an individual's credit report plays a factor in hiring practices. Regardless of this knowledge, too many Americans continue to discount their knowledge or try to improve their economic circumstances.

Recognizing the trend, the government has recently stepped in and announced plans to establish an Office of Financial Literacy, aimed at urging Americans to play a larger role in their personal finances. Despite previous initiatives, including a push for consumers to obtain a copy of their credit reports, little has been successful in prompting Americans to be more proactive about their money.