Can you live without knowing your credit rating?Can you live without knowing your credit rating? According to many financial advisers, analysts and the ads that proliferate on TV and the Internet, probably not.

Over the past decade or so, consumers have been told their credit score is essential to their financial well being. It can also affect them well beyond any concerns they might have over the amount of credit they can access.

Credit cards have been common in the U.S. since the 1950s, and as their popularity grew so did concerns about the misuse of a consumer's information.

Increased Focus on Free Credit Reports

Following the Fair Credit Reporting Act, FRCA, passed in the 1970s, and the Fair and Accurate Credit Transactions (FACT) Act of 2003, the nation's three consumer reporting agencies -- Equifax, Experian and Transunion -- have been required to provide the public with free copies of their credit reports, at their request, once every 12 months.

Until the availability of those free credit reports, "the people who probably needed to know it the most would say, 'why pay money to know I'm a bad credit risk?'" says Dr. Maclyn "Mac" Clouse, professor of finance at the University of Denver's Daniels College of Business. "So we didn't see a whole lot of interest. But now there's an increased focus on [credit reports]. It's still a case where the majority of people wouldn't know a good score from a not-good score."

A large majority of consumers don't even bother to check their credit scores. According the National Financial Capability Study, released late last year by an arm of FINRA -- the Financial Industry Regulatory Authority -- only 38% of those surveyed had ever obtained a copy of their credit report, and even less had checked their credit score during the last 12 months. Another telling statistic: More than half of the people who did peek at their credit scores already had good ratings, above 720 -- while only 17% of those with fair to poor scores, below 620, had checked.

Credit Score May Not Be Most Important Issue

But more troubling than not knowing your credit score might be the consumers who fixate on it, says John McCosh with CredAbility -- a national non-profit consumer counseling agency helps consumers through bankruptcies,mortgage delinquencies and credit card debt.

"It seems like in the last five years that there's been an increase in advertising about credit repair, [like] the guys who sing about free credit reports," he says. "People are definitely focused on that score. And from our client's perspective, a lot of times they are worried about their credit score when they have a lot of other issues that they really need to resolve [first]."

One of the most common questions CredAbilty's counselors are asked is whether attempts to manage debt hurts credit scores.

"The answer is no, not directly," McCosh says. "But the likelihood is that, if you've gotten to this point of having late payments and other issues [that have already] hurt your credit score ... this will help fix it over time. But as far as what it's going to look like for the next six months, that damage is probably already done. The credit score is not their most important issue when they're calling us, but that's the thing they want to talk about most."

Credit reports have a great impact on how you are viewed as a consumer. They include information not only on your bill-paying habits but also if you've ever filed for bankruptcy, been sued or arrested. The consumer reporting companies, according to the FTC, "sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home."

Credit Reports May Be Used by Prospective Employers

And some observers wonder whether credit scores should be used as an overall measure of a person's economic or workplace trustworthiness. "It's like looking at someone's character," says Dr. Clouse. "I'm not going to get a qualitative score out of that. In that sense it's just a tangible, quantitative number, and it is what it is."

There's been criticism that unrestrained access to credit by banks and other financial institutions led to the housing bubble crisis in 2008, which in turn sparked the current recession and has made credit much harder to obtain.

"The banks are very leery now to make loans they think might turn bad," says Dr. Clouse. "[But they] are in an awkward position. On one hand you hear politicians saying banks must start lending again, but in their other ear they have the bank regulators saying 'you messed up, don't do it again, make high-quality loans, don't do things that will decrease your capital.'"

Credit scores "have definitely become more important in a real way, especially in this economic environment," says McCosh. "They are on average about the same or better than they were."

However, he cautions that "if your score is being hurt because you're having trouble paying your mortgage or because you've lost your job and you're having trouble paying any of your bills, then that's small comfort. In terms of getting more important, more and more employers are doing credit checks, not so much on the score, but they're checking the credit report. And if they see late payments or other things that would hurt your score, that's also going to hurt your chances to get that job."

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