credit score

36 Million Americans Are Afraid to Check Their Credit Reports

This credit report phobia does not seem to afflict everyone equally. It is especially pronounced among millennials, women, and people with low income.

According to a new poll, the specter of Great Recession hardship still looms large for many Americans nearly a decade after the downturn ended, even though most negative records from that era have already fallen off people’s credit reports. Lots of people are simply too scared to see what’s on there, even if their inaction will lead to bad outcomes.

“We saw this with mortgage foreclosures, where people would not answer the phone or open their mail because they were afraid of bad news. It’s like a student not picking up an exam they know they did poorly on,” said Michael J. Collins, faculty director of the Center for Financial Security at the University of Wisconsin. “The problem is credit reports are dynamic and may contain errors, so you need to stay on top of it.”

This credit report phobia does not seem to afflict everyone equally, either. It is especially pronounced among millennials, women, and people with low income.

* Millennials are 5.5X more likely than baby boomers to not check their credit reports because they’re afraid to see what’s on them.

* People with low income are 6X more likely than those with high income to not check their credit reports because they’re afraid to see what’s on them.

* Women are 2X more likely than men to not check their credit reports because they’re afraid to see what’s on them.

Robert B. Walker, director of undergraduate studies at the University of Iowa, says one reason people have this fear is, “there is not enough personal finance education in our schools, colleges, and universities that stresses the importance of credit reports and credit scores.” Walker also notes that “credit reports were designed for bankers and financial analysts,” not consumers.

There is reason for hope, however.

“I teach millennials, and I have them pull their credit reports for my personal finance class,” said Rick Proctor, an associate professor of finance at Siena College. “I’m surprised that they are so much more unlikely to pull their reports than others. It probably falls into a fear of the unknown.” And such fears inevitably fade with time.

Hopefully, the millions of Americans currently suffering from a credit-report phobia will conquer their fears and finances sooner rather than later. After all, credit reports and scores really shouldn’t be scary. And ignorance about what’s going on with a credit info won’t be bliss for long. There are far too many errors and fraudulent accounts listed on credit reports, and a bad credit score can cost way too much.

A credit report phobia is pretty easy to get over if these five tips are taken to heart:

Resetting the Expectations. The first step is psychological, but wrapping the mind around why checking the credit reports isn’t scary, will make the rest way easier. There’s only upside to checking the credit report. For example, a mistake can easily be disputed which can result in a quick credit score boost. FTC research has shown that 1 in 4 people have errors on their credit reports that could affect their credit scores.

Researching First: The credit report will be a lot easier to understand if the basic terminology is understood.

Starting with the Free Credit Score: A credit score is a lot easier to digest than a credit report.  Getting a free credit score is even easier than a free credit report these days, too.

Putting It on Your Calendar: It’s important to make a specific plan for attending to critical tasks that are easy to put off. So blocking off some time and minimizing distractions will get the job done.  Conquering credit reports all in one sitting can be mind-numbing. Breaking the task up into multiple small sessions makes it more manageable.

Doing It With a Friend: The buddy system can be a big help, even with personal finance. So making a credit-improvement pact with a close friend or family member can be helpful. Any questions that arise during the work session may become easier to solve with two people working on the problem.

Article courtesy of WalletHub