More than 50% of Americans Failed This Quiz. Can You Do Better?

what affects your credit score

Do you know how credit cards work?

That seems like a stupid, basic question to ask in America… on a personal finance blog.

Unfortunately, the overwhelming answer is, apparently, no.

We do not know how credit cards work, what determines a credit score or how that score affects other areas of life, according to a survey by Harris Poll, commissioned by NerdWallet.

We’ll share some results below, but first, you can take the quiz yourself.

How Does Your Knowledge Compare With Others’?

When this survey was conducted, the findings were surprising.

  • Most Americans don’t know which actions affect their credit scores or what effect they have.
  • More than half don’t know when their credit card purchase starts accruing interest.
  • Only 9% of Americans know where their credit score actually comes from.

The majority of people who have taken this quiz have answered fewer than 50% of the questions correctly.

I got a 35%. (I also don’t have a credit card, in part because the system is intentionally so complicated for average consumers.)

Did you do any better?

After you take the quiz, have a look at these surprising myths about credit cards the survey revealed many Americans believe.

Myth 1: Carrying a Credit Card Balance Helps Your Credit Score

More than half — 54% — think carrying a balance will help your credit score.

Fact: Using your card is important, but you should pay it off each month. Carrying a balance will just cost you money in interest.

Myth 2: Closing an Older, Paid-Off Card Helps Your Credit Score

Seventy-eight percent of Americans don’t know that closing an older, paid-off card actually hurts your credit score.

Fact: Closing a card reduces your overall available credit, which means your utilization will be higher. Utilization is an important factor in your credit score, and you want it to be low.

If your older card is paid off and doesn’t carry an annual fee, you can keep it open to help your score. Keep it active by automating a small monthly bill to be paid on the card (like your Netflix subscription), and pay off the balance each month.

Myth 3: Paying a Bill Late Will Always Hurt Your Credit Score

Only 8% of Americans know how a late payment affects your credit score.

Fact: This is actually good news: If you pay within 30 days of the due date, a late payment will not likely be reported to credit agencies.

It will, however, incur a fee, so it’s still best to pay on time.

Myth 4: A Credit Score is a Singular Number From One Agency

I thought I knew this one, but I got it wrong! So did 91% of people surveyed.

Equifax, Experian and TransUnion are three credit reporting agencies. You’re entitled to a free credit report from each of them once every 12 months, though you may have to pay to receive your actual score.

Fact: You have hundreds of credit scores. Most lenders count on the FICO score model of those top three bureaus, so it’s not altogether misguided to focus on those.

But know that if you’re getting your score from a free scoring site or another bureau, it may use a different model. The score you receive is not definitive and may not be the one lenders are seeing when they run a credit check.

Myth 5: Interest Begins Accruing Immediately After a Purchase

Fifty-five percent of Americans have the wrong idea of when interest begins accruing on your credit card purchases.

Three in 10 think it starts immediately after a purchase is made. Many believe it starts once the bill is issued. Both are wrong.

Fact: Interest doesn’t begin accruing until the day after a bill is due. You won’t pay any interest if you pay your bill by the due date each month — you’ll only pay off the balance of purchases you made with the card.

Myth 6: An Annual Fee on a Credit Card is Never Worth It

More than a quarter of Americans say an annual fee is never worth it.

Fact: An annual credit card fee is worth paying if the rewards you earn are greater than the cost of the fee. Surprisingly, only 40% of Americans responded with that answer on the survey!

Your Turn: How much do you know about credit card basics? Share your quiz score and thoughts in the comments!

Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post,, Writer’s Digest and more.