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BMO Harris Bank Survey Finds Four in 10 Millennials Believe Carrying a Credit Card Balance Will Improve Their Credit Score

CHICAGO, IL -- (Marketwired) -- 08/27/14 --

  • Across all ages, 30 percent believe carrying a balance will help their credit score
  • Only half of millennials check their credit score on an annual basis
  • BMO Harris suggests maintaining a score above 680, and provides advice on how to get there

According to a new survey from BMO Harris Bank about Americans and their understanding of credit, 39 percent of millennials (ages 18-34) believe that if they carry a balance on their credit card it will help improve their credit score. The findings indicated that while most Americans believe they have a solid understanding of what a good credit score is, there is confusion around attaining it.

Most Americans (80 percent) across all ages say they are knowledgeable about how to achieve a good credit rating. Half check their score once a year, while 30 percent check it every few years or less. One fifth don't know their score. Among millennials, 72 percent say they are knowledgeable, and 48 percent check their score every year. However, 27 percent check it every few years or less, and one quarter don't know their credit score.

On average, Americans believe a good credit score is 660. Among millennials that number drops to 625, while those aged 35-54 and 55+ believe a good score would be 675.

"The good news here is most Americans are not far off in what they believe is considered a good score, which we generally tell customers is in the 680-720 range. However, there's some room for improvement in terms of the frequency with which they check it," said Alex Dousmanis-Curtis, Head of Retail Banking, BMO Harris Bank. "Encouraging education around credit scores is a major focus for us, especially among the millennial population. A credit score stays with you as you go through your financial life, and can impact major decisions. Our bankers regularly work with customers to better understand their score better, and in some cases, get it where it needs to be to purchase that home or buy that car."

Americans were asked to identify a number of common credit score misconceptions as true or false. The following table indicates those who believed these inaccurate statements were true:

Statement                                              Total 18-34 35-54 55+
Your credit score improves if you carry a balance on   30%   39%   32%   18%
your credit card
Your credit score will immediately improve from better 64%   64%   69%   59%
behavior (such as reducing a balance)
Your level of education can affect your credit score   23%   19%   22%   27%
Checking your credit score can decrease your score     27%   34%   27%   19%
Your credit score is controlled by credit card         17%   23%   21%   7%
Closing a bank account will help improve your score    7%    10%   9%    1%
A poor credit score will stay with you forever         7%    13%   5%    3%
If you have low income you automatically have bad      5%    12%   3%    1%
Retail or store credit cards don't count on your       4%    10%   3%    1%
credit score
Credit scores only matter if you want to get a loan    10%   15%   8%    7%
Paying cash for everything can help your credit score  8%    11%   9%    4%

"In the wake of the Great Recession, consumers have been using credit cards more cautiously, despite this method of payment remaining as flexible and convenient as before. Consumers are now much more aware that credit card loans tend to be more expensive than other forms of borrowing and escalating loan balances can quickly sneak up on you. In turn, consumers are paying off their card balances more determinedly and drawing down less of their credit limits, one of the paths to improved personal credit ratings," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. "According to the New York Federal Reserve, total credit card debt peaked above $865 billion at the end of 2008 and, by early last year, it had fallen to around $660 billion -- a near 25 percent reduction in just over three years. Since then, credit card debt has been essentially flat, even as cards in circulation and credit limits have moved higher -- a sign that the caution continues."

BMO Harris also offers number of basic tips to manage and improve a credit score, including:

Check your credit report. This should be done at least 60 days or 90 days before applying for a loan in order to make sure that the report is correct. If it's incorrect, make sure to notify a credit agency before you apply for a loan. Checking your score will not change the number.

Pay your bills on time. When a bill is paid late, or is even 30 days past due, it can show up on your credit report for up to seven years.

Use credit when needed. If you never use credit of any kind, it doesn't mean that you'll have a great credit history. Lenders generally prefer to see some type of satisfactory payment history.

Use your cards lightly. Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. You often can increase your score by paying the balance off or keeping it low.

Consider that credit needs to be built up. A credit score is something that can take time to improve, so don't expect immediate changes and plan ahead. Your credit behavior can take months to be reflected in your score.

Survey results cited in this report are from interviews with an online sample of 1,004 Americans conducted between July 2nd and July 4th, 2014. The margin of error for a probability sample of this size is +/- 3.1%, 19 times out of 20.

About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris® and BMO Harris Bank® are trade names used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $586 billion in assets (as of July 31, 2014).


The survey referenced herein was conducted by Pollara Strategic Insights ("Pollara"), an independent research firm, at the request of BMO Harris Bank. Pollara is not affiliated with BMO Harris Bank, either by common ownership, management, control or otherwise. Results cited above are from an online survey conducted between July 2, 2014, and July 4, 2014, by Pollara. Interviews were conducted with 1500 individuals, selected at random from an online research panel. A probability sample of this size would be accurate to +/- 4.9%, 19 times out of 20. Data has been weighted by state, based on Census information, to ensure regional proportions match those of the actual US population.

BMO Harris Bank makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained herein and accepts no liability whatsoever for any loss (whether direct, consequential or otherwise) arising from any use of or reliance on the information listed herein. Information may be available to BMO Harris Bank and its affiliates that is not reflected herein. This report is for informational purposes only, is not investment advice and is not to be used as a basis for any investment decision. BMO Harris Bank does not provide legal or tax advice to clients. You should review your particular circumstances with your independent legal and tax advisors.

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