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We’re not financially illiterate. Far from it.

Erica Sandberg

April is Financial Literacy Month in the United States, which means that for the next few weeks countless experts will wax on about the sorry state of Americans’ money and credit proficiency.

But consider the definition of financial literacy: You possess an understanding of how money works, including ways to earn, save, invest, donate and spend. You also have a pretty good feel for the borrowing process, from researching and applying for credit products, to repaying debt at minimum cost. You even regularly review your credit reports and check your credit scores.

Are we really a nation of financially uneducated dolts? I don’t think so. Most of us have pursued and been approved for credit products. We understand that paying bills on time and staying out of debt is important.

In fact, here are a few poll and study results that prove we’re fairly cognizant about the personal finance subjects that affect us most:

Credit scores are better than ever.
According to FICO, the average credit score in the United States is currently at an all-time high of 699 (as of October 2016). This doesn’t happen by accident; it requires know-how and effort. Well done!

Why are scores climbing? Can Arkali, principal scientist at FICO, says credit scores are “showing modest and steady improvement” as we get farther from the last recession and negative information falls off credit reports. He also says the easy access to one’s credit score also is helping people to be more aware of how they are doing.

We are taking wise financial actions and we feel good about that.
According to the just-released 2017 Consumer Financial Literacy Survey:

  • 26 percent of U.S. adults are spending less than they were last year (up from 23 percent in 2016), and reversing a trend that’s been consistent since 2009.
  • 92 percent reported being very or somewhat confident that they made the right credit card, car buying and mortgage decisions. That’s up from 91 percent in 2016.
  • 75 percent pay bills on time and have no collection accounts. That’s up from 74 percent in 2016.
  • 68 percent of are contributing to non-retirement savings, a slight dip from 2016’s 69 percent.

We know what makes a person creditworthy and are aware of access rights.
A 2016 Equifax poll found:

  • 87 percent of U.S. consumers know that paying your bills on time is one factor affecting credit scores.
  • 81 percent know they can check their consumer credit reports at no cost to them.

Can Americans be doing better? Absolutely. We should all be paying our credit card debt in full every month, never skip a payment, save at least 10 percent of our paychecks and use plastic so well that we earn rewards while not paying a penny in interest.

When grades are passed out for financial literacy, America gets a “C” in financial literacy. We’re passing, but that’s hardly impressive.

In my experience, though, it’s not always a lack of financial knowledge that’s holding us back. Often, it’s just the result of being human. For example, we procrastinate and give in to temptation to spend. We get distracted and depressed – and sometimes we splurge. We lose our jobs or get hit with expenses that few among us can predict, such as a devastating illness or a car crash.

It’s not all good news on the financial front. There are some storm clouds on the horizon.


  • Credit card balances surpassed $1 trillion in December, according to the Federal Reserve’s G.19 consumer credit report released earlier this month. Card balances haven’t been that high since January 2009.
  • 39 percent of Americans are carrying credit card debt from month to month, according to the 2017 Consumer Financial Literacy Survey. That’s up from 35 percent in 2016.

Clearly, we still have work to do to clean our balance sheets.

Financially illiterate, though? I don’t think so. I believe that Americans are better versed in financial subjects than often is reported, and we are also eager for more guidance. Which is why we’re here.

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