Credit Reporting Literacy: Consumers Understood the Basics but Could Benefit from Targeted Educational Efforts

This report responds to a mandate in the Fair and Accurate Credit Transactions Act (FACT Act) of 2003 requiring GAO to assess consumers’ understanding of credit reporting. Based on survey responses for a national sample of 1,578 consumers, GAO found that consumers understood the basics of credit reporting and the dispute process, although most consumers did not fully understand their rights in the dispute process. GAO also found that several factors were associated with consumers’ knowledge. For instance, having less education, lower incomes, and less experience obtaining credit were associated with lower survey scores, while having certain types of credit experiences—such as an automobile loan or a mortgage were associated with higher scores. Other factors, such as gender and living in a state where credit reports were free prior to the FACT Act, did not have a significant effect on consumers’ knowledge. Targeted educational efforts could potentially increase consumers’ understanding of the credit reporting process.