Credit Card Debt

Credit Report vs. Credit Score – What’s the Difference?

credit score vs credit report
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When you apply for a loan, credit card, mortgage, student loan, or any other kind of credit, a lender may check your credit report or credit score before deciding whether or not to lend to you. A credit check may also be required when you’re looking for a job, new apartment, or even a mobile phone.

While your credit report and score are both used to make these types of lending decisions, there are major differences between the two. One is a detailed description of your credit and the other is just a snapshot of your current situation. The reasons why a company might check one instead of the other also vary. Here’s a quick look to understand the particulars of your credit report vs. credit score.

What is a credit report?

A credit report is a detailed record of how you’ve used credit in the past. It includes:

  • Information about past and current credit card accounts, mortgages, auto and student loans
  • Amounts owed to each creditor
  • Length of time an account has been open
  • Consistency of payments made on time
  • Inquiries into credit history
  • Current and former residential addresses
  • Current and former employers
  • Bankruptcy filings and legal judgments
  • Home foreclosure or vehicle repossession

These reports are created by credit reporting agencies — also known as credit bureaus — and the three main ones are Equifax, Experian, and TransUnion. Creditors send information about how you use credit to these agencies who compile this information into a list that has details about all the ways you’ve used credit in the past seven to ten years.

This information isn’t just available to your creditors—you can access it too. Thanks to the Fair Credit Reporting Act, everyone can receive an annual free credit report from each credit bureau. If something is incorrect or missing, you can address it with the credit bureau so that it doesn’t impact your credit in the long-term.

What is a credit score?

Unlike a credit report, which contains detailed information about your credit behavior and can be hundreds of pages long, your credit score is a snapshot of your current credit situation captured in a three-digit number. The number ranges from 300–850, and it’s broken down as follows:

Creditors use your credit score, sometimes in conjunction with your credit report, to determine creditworthiness. When you have a high score, you’re more likely to get approved for a loan with better rates and terms. If you have a low score, the creditor may view you as a lending risk and either deny credit or offer you less favorable terms.

Your credit score is provided by one of the credit bureaus, but it’s typically derived from a credit scoring model created by the Fair Isaac Corporation (FICO®). That’s why you’ll sometimes hear “FICO score” or “credit score” used interchangeably. However, there are other credit scoring models out there, including VantageScore as well as other proprietary scores generated by banks and financial institutions.

FICO calculates your credit score based on the following information:

  • Length of credit history (15% of score)
  • Amounts owed and whether its new or established debt (30%)
  • Types of credit—such as credit card debt, auto loan, mortgage, etc. (10%)
  • Frequency of payments that are “on time” versus “late” (35%)
  • New credit (10%)

It looks like this:

Credit scores are calculated based on information listed in your credit reports and may vary between credit bureaus. But it usually won’t vary much since it’s calculated based on your credit history.

Credit score vs. credit report: which does what?

Although there is overlap between the two types of credit information, there are some key differences.

 

Credit Score

Credit Report

Provides a numerical “grade”

 

Provides a detailed document

 

Used by a lender to assess a borrower

Indicates likelihood of debt repayment

Reviews credit inquiries

Contains information that is of public
record, such as collections or
bankruptcy filings

 

Can receive this each year, free of
charge

 

Shows current and former residential
address

 

Implies consistency of on-time
payments

 

Shows consistency of on-time
payments

 

Shows length of time an account has
been open

 

Looks at entirety of payment history

 

Looks at details of payment history

 

Shows bankruptcy filing, legal
judgments, foreclosures, and
repossessions.

 

Who looks at your credit information and why?

In addition to knowing the difference between a credit report vs. credit score, it helps to know who can access your credit details and how they use your credit information.

  • Lenders and creditors: When applying for a loan or credit card, a lender or creditor will use your credit report and score to approve or deny the application and determine your loan amount, interest rate, and terms. They may also check your credit periodically to decide if the terms of an existing account should remain the same or be adjusted.
  • Banks: A bank may review credit information before allowing you to open an account if they think a low credit score translates to a higher likelihood that you would overdraw the account.
  • Employers: There’s no evidence that poor credit equates to poor job performance, but employers may check your credit before offering you a job. Current employers may also check credit reports to determine if they should promote you, and government and military employers may check it to before granting an additional security clearance.
  • Landlords: A landlord will run a credit report–with your permission–to see if there’s a history of payment delinquencies, evictions, or foreclosures, as these may indicate that you will be late on paying rent or miss payments altogether. The landlord may deny your application or may require a co-signer to sign the lease with you.
  • Utilities and mobile phone carriers: These companies want to ensure a new account will be paid in full and in a timely manner. If you have a poor credit history, then you may have to put down a deposit to set up service.
  • Insurers: When applying for auto, rental, or homeowner policies, the insurer looks at credit information, which could impact your premium–lower scores can increase the amount.
  • Debt collectors: Debt collectors use credit reports to estimate whether a debt can be paid and to find your current address and employer information.
  • Government agencies: In various circumstances, the government may use your credit report to calculate payments for child support, process an application for a government license, or see if you qualify for government assistance.

Both credit scores and credit reports give an idea of how you handle money. Although a credit score provides a snapshot and may be enough for the lender or creditor to make a decision, the credit report provides details that reflect a fuller picture. This is why it’s important to check credit reports and dispute any errors you find. Do this annually for good credit health.

Get help with credit management and more

Understanding and improving your creditworthiness is an important part of good financial health. And luckily, learning how to deal with credit, debt, money, and planning for your future doesn’t need to be hard. At Freedom Debt Relief, we’ve created a simple to follow guide to help you find the tools you need to move to a better financial future. Get started by downloading our free guide right now.

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Charla Myers writes content that (hopefully) simplifies complex information to help people make decisions or complete tasks more effectively and efficiently. In particular, she loves empowering readers to find the right financial solutions for themselves. Living in California, she enjoys the beach, reading, hiking, and hosting dinner parties.