Experian Study on Credit Scores

David A. Szwak

Experian Study on Credit Scores

Postby David A. Szwak » Wed Feb 01, 2006 11:23 am

Experian Study Highlights Key Differences Between Consumers With High and Low Credit Scores

February 1, 2006

Experian Consumer Direct, the leading provider of online direct-to-consumer credit reports, scores and monitoring, today announced the results of a nationwide study on the differences between consumers in high and low credit score ranges. National and statewide results for the study can be found on Experian's National Score Index® Web site at www.NationalScoreIndex.com.

The Experian study compared consumers scoring less than 660 to those scoring 720 or greater. While there are many factors which impact a credit score, the Experian study focused on five key factors: monthly payment, debt (revolving and installment debt), debt usage (percentage of available credit used), number of late payments (over the past six months) and number of inquiries (over the past six months).

Managing credit responsibly is key to maintaining a high credit score. Maintaining a high credit score allows consumers to obtain better rates on loans and other borrowed credit. The study found that consumers with scores less than 660 had a significantly higher incidence of late payments as well as higher debt usage than those consumers with scores of 720 or greater. While those consumers in the higher scoring group had higher debt balances, they generally utilized less of the credit available to them. Overall the study results include:

Consumers less than 660 Consumers 720 or greater
Average monthly payment $291 $724
Average debt $6,661 $15,015
Average debt usage 27.7% 17.8%
Average number of late payments 2.32 0.0021
Average number of inquiries 3.07 1.44

"Often times consumers focus too much on the three-digit number and not how their credit behavior relates to that number," said Ed Ojdana, group president of Experian Interactive(SM). "By understanding the factors in their credit report that go into calculating their credit scores, consumers will find themselves more knowledgeable about credit scores and ultimately more prepared when interacting with a lender or other financial institution looking to extend them credit."

Experian empowers consumers by offering products and information to help them proactively manage their personal finances conveniently and securely online. Products include credit reports from all three national credit reporting companies, credit score reports that show the positive and negative factors that determine their credit score, a credit score simulator that allows consumers to change the value of key credit score factors and see the impact to their credit score, and credit monitoring products that provide daily monitoring of their Experian credit report or all three national credit reports.

More information about the Experian study, plus additional credit data at the state and local levels, can be found on Experian's National Score Index Web site at www.NationalScoreIndex.com.

Source: Experian Press Release

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