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FDIC Consumer News - Winter 2002/2003

Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Special Report on Credit Reports and Credit Scores

(Credit) Report Card. For: Chris Consumer. Grading Period: Adulthood. Pays debts on time: B-. Pays at least the minimum amount due: A. Keeps debt levels managable: C+. Limits number of credit cards: B+. Comments: Chris continues to make improvements but still can do a better job paying bills on time and keeping debt levels low. Your Credit Record: A Report Card on Your Personal Finances

Your credit history can affect your daily life—from where you live and work to how much you pay for a loan or insurance. Here's a guide to protecting your financial reputation.

Think back to your school days, when grades, report cards, test scores and teacher recommendations had a lot to do with getting ahead. Now fast-forward to your life today. You may not think much about it, but you're still being evaluated and graded—in the subject of personal finance—and once again the results can be critical to your future. We're referring to credit reports, which summarize your history of paying debts and other bills, and credit scores, which predict risk. Both help banks, insurers, landlords and even potential employers make judgments about your reliability.

Why should you care? Because, in general, the better your credit history and credit score, the better your chances of obtaining a low-cost loan or insurance policy, renting an apartment, or qualifying for a job.

Important: Even a modest improvement in your credit file and credit score—which can sometimes result from simple corrections to incomplete or erroneous information in your credit report—may be enough to qualify you for a lower interest rate on a mortgage or credit card and save you hundreds of dollars each year in interest payments. On the other hand, if your credit record weakens, you may face consequences associated with becoming a higher risk, including an increase in the interest rate or a reduction in the credit limit on an existing credit card. "Whether you're an A-plus or a D-minus in handling finances, you want to have the best and most accurate report and credit score possible, because even small differences can cost you or save you a bundle of money," says Janet Kincaid, a Senior Consumer Affairs Officer with the FDIC.

Unfortunately, many consumers don't understand the significance of their credit history or the simple things they can do to build and protect a solid financial reputation. That's why FDIC Consumer News is devoting this issue to the somewhat mysterious world of credit reports, credit scores and credit bureaus. We hope that after you've read this special report you will know about such things as:

  • What credit reports and credit scores are all about, including who produces them and who has access to them;
  • How to make corrections to your credit report if you find wrong or missing information that can lower your credit score and cost you money;
  • Why and how to avoid common consumer mistakes that can tarnish your credit record and cost you money;
  • How to avoid credit-related scams, including identity theft and credit repair fraud;
  • How to take advantage of federal laws that protect you and your credit record; and
  • Where to turn for more help or information.
Here's your homework assignment. Study our special report and test your knowledge by taking the quiz we've prepared for you. The more you know about your credit report and your credit score, the better your chances of making the smart decisions that will help you protect your finances and your financial reputation.

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Last Updated 02/26/2003 communications@fdic.gov