Credit scores are going up across the country, but reports show that Americans’ understanding of credit is declining.

Confident mid adult college student raises her hand to ask or answer question while attending a college class.

Well done, America. Credit scores across the nation are going up.

On the other hand, knowledge of how credit works is declining.

Consumers’ grasp of credit is the lowest it’s been in eight years, according to an annual survey by credit scoring company VantageScore and the Consumer Federation of America, a nonprofit association of consumer groups. For example, 62% of those surveyed this year knew that everyone has more than one credit score. In 2012, 78% knew that.

More people rated their own knowledge highly despite knowing less. In an era when free credit scores and reports are plentiful, this is perhaps not surprising. The share of respondents who called their credit knowledge “excellent” or “good” was 60% in 2019, up from 54% in 2012.

Millennials were a little more modest. Only 56% of those ages 21 to 38 rated their knowledge as “excellent” or “good,” compared to 61% of people ages 39-54 and 65% of those 55-73.

Why credit scores are going up

The average FICO score last year was 704, according to FICO, continuing a steady rise from a low of 686 in 2009 during the Great Recession. The average VantageScore — FICO’s competitor —  was 680, continuing to climb but not yet as high as the 685 seen in 2008.

Factors such as a large-scale economic recovery, low unemployment and consumers’ confidence in their own finances contributed to higher scores, says Rod Griffin, director of consumer education and awareness at Experian.

Of course, consumers being more careful with money since the financial downturn also played a part, Griffin says.

Also, millions of people experienced a score bump over the past two years as the three major credit bureaus — Experian, Equifax and TransUnion —  stopped including some negative marks on credit reports, including tax liens, civil judgments and some types of collections.

What you don’t know about credit can hurt you

The knowledge survey revealed that all generations misunderstand some elements of credit.

Among the findings, a significant share of respondents didn’t know that:

  • Checking your own credit never hurts it (38%).
  • Opening several credit card accounts at the same time can lower your score (38%).
  • Cellular plan providers might use credit scores to price services (41%).

It’s crucial for millennials, who have many financial decisions ahead, to know what factors have an impact on a credit score. Fortunately, two factors make up the majority of what affects your credit score — paying bills on time and keeping credit card balances as low as possible.

“A lot of credit is boring. It’s all about consistency and keeping your debts as low as possible and making your payments on time,” says Griffin.

How to stay on top of your credit

Keep an eye on things: Checking your score frequently is a healthy habit and it won’t hurt your credit.

Even more important is checking your credit reports for accuracy. They may have errors that drag down your score, and you can request to have them removed.

To check your reports, you can use any of the free apps or websites that offer them. Federal law also entitles you to a free copy of your credit report every 12 months from each of the three credit bureaus; request them at annualcreditreport.com.

Understand who sees your score: “Most people still understand that credit card issuers and mortgage lenders use credit scores,” says Stephen Brobeck, senior fellow at the Consumer Federation of America. But the survey showed that only 65% of people knew landlords used credit scores, while only 59% knew cell phone companies used them and 58% knew home insurance providers did.

Also, potential employers may check your credit report before hiring you. And in most states, car insurance providers can use your score to set premiums.

Educate yourself: Griffin recommends using free tools to learn how your score and reports work, as opposed to just checking them occasionally. The Consumer Federation of America website has the credit quiz used in the survey, which is a good place to start. And many personal finance websites offer educational content alongside a free score.

This article was written by NerdWallet and was originally published by The Associated Press.