Many Americans Don’t Take Basic Steps to Improve Their Financial Profiles, Survey Shows

A new survey conducted on behalf of mortgage portal HSH.com revealed recently that a good percentage of American consumers did not do a single thing to improve their debit or credit profiles in 2014, and a similarly high share does not plan to make the necessary improvements in the current calendar year.

These disturbing patterns were among the main talking points on the HSH.com poll, which essentially says that the average American consumer can be very blasé when it comes to financial planning and/or money management.

Financial Profile

According to HSH.com vice president Keith Gumbinger, the results of the poll were “surprising,” as he had some high hopes for the American consumer in 2014, expecting that many would take advantage of low mortgage interest rates and refinance. He also found himself scratching his head over the small percentage of consumers who tried to pay more than their monthly payment toward their mortgages.

The positive effects of improving one’s financial profile, as anybody can agree with, are manifold. For example, a higher FICO score, or “credit score,” means lower interest rates on one’s credit card, mortgage, or automobile loan. Paying off credit card debt does just that – it removes the proverbial monkey off a consumer’s back, and many still believe this is a powerful tool in improving financial profiles.

Refinance at
Loan Type

Please enable JavaScript for the best experience.

As for higher monthly mortgage payments than the minimum monthly requirement, this could reduce interest charges going forward. Refinancing also helps to save mortgage consumers a lot of money, especially when rates are reduced significantly on the new mortgage, while planning for retirement could redound to tax savings once a consumer is already retired.

However, there may be more than meets the eye, as Gumbinger suggested – consumers may be, informally speaking, “slacking,” because their hands are tied. “It’s also reflective of the situation of the middle class,” he posited. “There has been weak income growth over the past six or seven years. The results may be indicative of the weak state of the recovery.” Statistically speaking, the U.S. economy has indeed recovered nicely from the doldrums of the Great Recession, but not too many Americans have been able to feel this, as evidenced by the low percentage of consumers who tried to do something to consciously improve their financial profile.

In addition, Gumbinger suggested that the numerous documents consumers have to furnish in order to refinance their homes may have been too intimidating for many, even if these documents are required under federal law.

Looking at the statistics revealed by the HSH poll, only 15.27 percent of respondents said that they refinanced their mortgage in 2014. Only 26.6 percent said they saved money for their retirement fund, 3.04 percent said that they prepay, or make extra payments on their mortgage, 23.92 percent said that they paid off their credit card debt, while 24.24 percent made efforts to improve their FICO score.

For 2015, 8.97 percent plan to refinance their home loan, 32.74 percent want to save for the retirement years, 11.64 percent look to make mortgage prepayments, 29.85 percent want to settle their credit card debt, and 27.75 percent are taking steps to improve their FICO score.