When it comes to credit scores, consumers are finally beginning to get it, but they still need to learn more about the important numbers if they want to save money.

A recent survey revealed:

• The percentage of consumers who understand that making payments on time influences credit scores, rose from 87 percent in 2004 to 93 percent in 2005.

• The proportion who know that maxing out a credit card influences scores, increased from 66 percent to 77 percent.

• The share of consumers who understand that various lenders and other financial service providers use credit scores to price and make products available increased -- from 81 percent to 91 percent when considering mortgage lenders, from 77 percent to 86 percent for credit card lenders, from 50 percent to 58 percent for cell phone companies, and from 47 percent to 57 percent for home insurers.

In late July, 2004 and in early August, 2005, the Consumer Federation of America (CFA) and Providian Financial commissioned Opinion Research Corporation to examine consumer access to and knowledge of credit scores.

Both surveys included more than 1,000 representative adult Americans and while it found improvements, it also reveals consumers still have a ways to go learning essential facts about scores.

"In the past year, consumer understanding of these scores has improved, in part because many consumers have obtained their scores," said CFA Executive Director Stephen Brobeck.

"Unfortunately, most consumers still do not know basic facts about credit scores and their financial significance," he added.

A credit score, used by the vast majority of lenders to approve or deny a mortgage application, is a statistical analysis of a consumers' creditworthiness generated, in part, from information on a credit report.

A credit report tracks credit consumers' payment records on individual credit accounts and reveals how well or how poorly each account is being paid.

Scores range from 300 to 850, with low scores reflecting poor credit and netting consumers less chance of loan approvals or approvals with higher loan rates. Consumers with higher scores are more creditworthy and are approved for loans more often and get cheaper loan rates.

"If consumers were to raise their credit scores by only 30 points, on average, they would save $16 billion on lower credit card finance charges alone," said J. Christopher Lewis, Providian's chief public policy officer.

In the past, three credit reporting agencies -- Equifax, Experian, and TransUnion -- have by and large been the keepers of traditional credit reports and scores. Borrowers who don't show up on the credit reporting radar of the Big Three because the don't use traditional credit -- credit cards, installment loans, auto loans, and the like -- recently gained access to special credit reporting and scoring systems that use data not always crunched by the credit reporting and scoring triumvirate.

Consumers can raise their credit scores by paying their bills consistently and on time; not maxing-out their credit cards or other "revolving credit; not having open many unused credit accounts; not opening many accounts rapidly and by paying off debt rather than just moving it around, among other steps.

Despite scoring higher this year on the survey than they did last year, consumers still struggle with essential knowledge about scores.

For example:

• Most, 76 percent of consumers, mistakenly believe that they have the right to obtain their credit score for free once a year. Consumers have free access to their credit reports -- one each year from each of the three major credit reporting agencies and other organizations that store similar data and are regulated by federal consumer credit laws. Consumers can purchase their credit scores from all three bureaus for $44.85 through credit score modeler Fair Isaac or individual reports and scores from the three bureaus -- TransUnion; Experian and Equifax -- for as little as $14.50. They can also obtain scores from other personal credit data gathering services.

• Only 27 percent understand that scores are not a score for knowledge, an amount or a measure of attitude, but a measure of credit risk

• Less than half, 47 percent, understand that individuals have more than one score -- one from each of three major credit bureaus and other sources as well.

• Only 54 percent understand that maxing out a credit card will lower one's credit scores.

• Only 20 percent know that just making minimum payments on credit cards will lower one's scores.

• Less than one-in-four, 23 percent, know the identity of the three major credit bureaus.

To help consumers better understand credit scores, CFA and Providian offer a Web-based quiz, "Do You Know the Score on Credit Scores?", which tests consumers for their credit-score knowledge by providing key facts with the test.

Published: September 26, 2005

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.