To help consumers better understand credit reports, credit scores and credit basics, the U.S. Federal Reserve launched an online guide last week outlining the ABC’s of consumer credit.
The consumer guide to credit explains what is included in your credit report and how your credit report affects you, as well as how your credit score is calculated and how to dispute credit report errors. And if you plan on applying for a car loan or auto lease in the near future, it’s worth a read.
Although this information is already available on national credit bureau and credit score websites, now it is also available through the federal government. The Wall Street Journal points out that the Fed’s credit guide was launched before the new consumer protection rules approved by Congress years ago go into effect in January.
The new rules will require lenders to inform consumers if there is any negative information on their credit report and if that information will translate into higher interest rates and fees on an auto loan, mortgage or credit card. The Fed’s new credit guide can help consumers understand new information they might receive from lenders, The Wall Street Journal explains.
Before applying for an auto loan or lease, shoppers should check their credit report to see if there are any errors. If consumers find errors in their credit report, they should dispute the mistake and wait to apply for the auto loan or lease until the mistake has been fixed.
For car shoppers, this can mean the difference between receiving a 6 percent interest rate on a new car loan and qualifying for the manufacturer’s 0 percent car loan rate incentive, which can save several hundred to thousands of dollars over the life of the auto loan. Knowing your credit score can also help you when it comes time to negotiate the terms of the auto loan or lease.