Nuances of Credit Scoring Still Elude Consumers Consumers still have many misunderstandings about the details of credit scoring, like the impact of having several inquiries on their report around the same time, according to the Consumer Federation of America. The federation and VantageScore Solutions, creator of a score that competes with the heavily used FICO score, commissioned a survey to gauge the public's understanding of credit scoring and the factors that affect a credit report. A credit score is a three-digit number, based on information in your credit report, that lenders use to help gauge the risk of lending you money. Both FICO, the most widely used scoring model, as well as the newest version of the competing Vantage score, use a range from 300 to 850 - the higher the score, the lower the risk. Earlier versions of the Vantage score use a range of 501 to 990. Just 7 percent of those surveyed knew that making several inquiries about a consumer loan, like a car loan or mortgage, in a short period of time won't lower a borrower's credit score. In fact, consumers should check multiple lenders to be sure they are getting the best rate, Stephen Brobeck, the federation's executive director, said in a telephone briefing about the findings. This misunderstanding may hamper comparison shopping for interest rates, and end up costing consumers extra on their loans, he said. Generally, multiple similar inquiries within a one- to two-week period are recognized as comparison shopping, so they count as one inquiry and don't greatly affect your score, he said. Even if the inquiries span more than two weeks, it's generally worth the effort because the potential savings outweigh a minor impact on your score, he said. "Consumers should not worry that comparison shopping for a loan in a week or two will lower their scores," he said. It's a different situation, however, if you apply for multiple store credit cards in a short period of time. Such inquiries are clearly separate applications for credit, and may be detrimental to your score, said Barrett Burns, president and chief executive of VantageScore Solutions. Consumers were also uninformed about the impact of co-signing for a student loan for a child. About a third didn't know that even one late payment could harm the credit score of the loan's co-signer. Consumers were also not aware of the relative cost of having a low credit score. About 80 percent underestimated, for example, the increase in interest costs due to a low credit score when taking out a $20,000, 60-month auto loan. The correct answer, according to a quiz offered by the federation, is that a person with a low score will pay around $5,000 more than a person with a high score. To see how much you know about credit scores, and how to improve them, answer the questions at creditscorequiz.org. The updated quiz covers many of the questions asked in the survey. The telephone survey of 1,022 adults, including both land lines and cellphones, was conducted by ORC International on April 25 through 28. The survey results can't be compared with prior years" surveys because of a change in methodology, including the addition of cellphones to the survey sample. The federation offers these tips for maintaining a healthy credit score: pay your bills on time each month; don't put the maximum amount on your credit cards; pay down debt, rather than just moving it around to new cards; check your credit reports for potential errors. You can check them free at annualcreditreport.com. Were you aware that comparison shopping for rates won't harm your credit score?