How Credit Reports and Credit Scores Can Affect Your Buying Power

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FDIC Consumer News – Summer 2005 – Credit Reports and Credit Scores


Related Financial Services - The following list of company and services directories offer a wide variety of programs for consolidating bills and other similar services, such as a getting a mortgage refinance interest rate quote from a lender or an online quote for life or car insurance.

  • Debt Consolidation Settlement - Too much debt? List of companies providing this alternative to bankruptcy that provides for debt negotiation and arbitration services for those that need to eliminate debt.
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  • Debt Consolidation Program - Do you simply have too many credit cards and other bills? Review this directory for useful information and compare a list of service providers that may be able to help you.

A Shopper's Guide to Bank Products and Services

How Credit Reports and Credit Scores Can Affect Your Buying Power


Even a modest improvement can get you a better deal on a loan or other financial product


Among the most important things you can do to get the best deal on a loan, a credit card, insurance and other financial products is to make sure your credit record is accurate and in its best possible shape. Why? Because even a modest improvement in your credit reports (your history of paying debts and other bills) and your credit scores (numerical ratings of your credit history used by companies in making business decisions) can improve the offer on a financial product you may want.


In fact, something as simple as paying down your credit card balance or correcting erroneous information in your credit report can boost your credit score enough to save you hundreds of dollars each year in interest or other charges.


It's also important to remember that, as of September 1, 2005, residents in all 50 states and U.S. territories can obtain one free copy of their credit report each year from each of the three nationwide credit bureaus (Equifax, Experian and TransUnion).


The law, which took effect in western states in December 2004, is intended to help people ensure the accuracy of their credit information and monitor their credit files for signs of identity theft. Prior law allowed for free credit reports only under certain circumstances.


"By giving all consumers access to free credit reports, more consumers should be encouraged to review their credit histories on a timely basis," said Cora Lee Page, an FDIC Consumer Affairs Specialist.


For more information about ordering free credit reports, go to the special Web site established by the three credit bureaus at www.AnnualCreditReport.com or call toll-free 877-322-8228.


Many experts say that if you have been denied a loan or offered credit on terms you think are unfavorable—and you believe your credit report is accurate—ask your lender about the role your credit score played in the decision and consider paying to see your score.


Even a modest change in your score could make a big difference. "If a lender requires a credit score of 680 or higher to get a mortgage loan with a low interest rate and the scoring system the lender is using puts you at 660, taking steps to improve your score may save thousands of dollars over the life of the mortgage," said Page.


The bottom line: Building or maintaining a good credit record and paying attention to how your credit history is reported—preferably before you apply for a new loan or other financial product—can save you time and money.


For more information, go to the Federal Trade Commission's Web site about credit reports and credit scores at www.ftc.gov/bcp/conline/edcams/credit/coninfo_reports.htm.


Summer 2005 | Buying Power | Internet Banking | Account with Gift | Financial Supermarkets | Shopping List | FDIC Help


FDIC Consumer News is published by the Federal Deposit Insurance Corporation


FDIC Consumer News is produced quarterly by the FDIC Office of Public Affairs in cooperation with other Divisions and Offices. It is intended to present information in a nontechnical way and is not intended to be a legal interpretation of FDIC or other government regulations and policies. Mention of a product, service or company does not constitute an endorsement.


Find current and past issues of FDIC Consumer News at http://www.fdic.gov/consumernews. Refer to this same index to locate the issues that are specially formatted for being reprinted in any quantity.


To receive an e-mail notice about each new issue of FDIC Consumer News posted on the FDIC Web site, with links to stories, follow instructions posted at www.fdic.gov/about/subscriptions/index.html.


Last updated on 5/17/2005

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