The views expressed in Economy Matters are not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System.
Editor's note: Throughout Economy Matters, "Southeast" refers to the six states that, in whole or in part, make up the Sixth Federal Reserve District: Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee.
Financial Tips from the Atlanta Fed: Get Smart about Credit
Your credit history says a lot about you. It can show lenders and others how you manage your financial responsibilities. These tips can help you understand how to improve your credit health and financial stability.
- Your credit report is a record of your credit history. Information typically stays on your credit report for seven years, though certain entries such as bankruptcy filings may remain for 10 years. Consumers have the right to receive a free copy of their credit report annually from each of the three major credit reporting companies.
- The information in your credit report is used to generate your credit score, which is a snapshot at a particular point in time of your financial behavior.
- It is important to ensure the data on your credit report is accurate. Errors in your credit report can be costly since it can mean higher interest rates when you are ready to make a purchase.
- The biggest components of your credit score are based on your payment history (35 percent) and amounts owed (30 percent). You can have a positive impact on your credit score by paying bills on time and reducing your debt-to-credit ratio. One strategy for reducing that ratio is keeping credit card balances low or paying off balances monthly.
- Learn more about credit and test your credit knowledge with this online course for consumers.