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Understanding the Credit Knowledge Gap Among U.S. Adults

A recent survey by Credit One Bank has shed light on concerning gaps in credit knowledge among American adults who own credit cards. The results highlight critical misunderstandings surrounding foundational credit concepts, underscoring the urgent need for enhanced financial literacy resources.

Survey Highlights

The survey, which involved 2,007 U.S. adults, discovered that a staggering 72% were unaware that a missed payment could negatively affect their credit score for up to seven years. Furthermore, 65% of respondents didn’t know that they should limit their credit utilization to 30% or less of their available credit. This percentage is essential, as high credit utilization can significantly influence credit scores.

Additional findings revealed that 70% of participants were oblivious to the fact that keeping their oldest credit card accounts open— and using them periodically—can help maintain a better credit history. About 48% didn’t realize creditors might close inactive accounts, which could lead to a decrease in the length of their credit histories. Finally, 34% misconstrued the difference between a hard inquiry and a soft inquiry into their credit reports.

Steve Min, Chief Credit Officer at Credit One Bank, emphasized, "Financial setbacks can affect anyone, but understanding how credit works is a game-changer in developing a sound financial future. Our survey data highlights a notable lack of fundamental credit knowledge among many Americans."

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