The views expressed in this paper are those of the author and do not necessarily reflect those of Freddie Mac, its management, shareholders, or Board of Directors.
Is Ignorance Bliss? Consumer Accuracy in Judgments about Credit Ratings
Article first published online: 28 JUN 2008
Copyright 2008 by The American Council on Consumer Interests
Journal of Consumer Affairs
Special Issue: Financial Literacy: Public Policy and Consumers� Self-Protection
Volume 42, Issue 2, pages 189–205, Summer 2008
How to Cite
PERRY, V. G. (2008), Is Ignorance Bliss? Consumer Accuracy in Judgments about Credit Ratings. Journal of Consumer Affairs, 42: 189–205. doi: 10.1111/j.1745-6606.2008.00104.x
- Issue published online: 28 JUN 2008
- Article first published online: 28 JUN 2008
There is considerable evidence to suggest that consumers are often misinformed about basic financial and economic principles. The purpose of this study was to examine the accuracy of consumers’ self-assessments of their credit ratings. Findings suggest that approximately 32 percent of consumers overestimate their credit ratings, while only 4 percent underestimate their credit ratings. Those who overestimate their credit quality are less knowledgeable about financial matters in general and are more likely to have acquired their financial knowledge from difficult past experiences. In addition, consumers who overestimate their credit ratings are less likely to budget, save, or invest regularly.