- A credit report is a history of your use of credit.
- Your credit score is based on the information in your credit report.
- You have several different credit reports and credit scores
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When you apply for a loan, a lender is likely to check your credit. Your credit history and credit score provide insight into how you’ve used credit in the past. Using this information, a lender can decide whether they think you’re likely to make your loan payments on time and repay the entire debt. Your credit history might also be used when you apply for insurance, get cell phone service, or rent an apartment.
Your credit is represented in two ways: your credit report and your credit score. A credit report is the entire history of your experience with credit. A credit score is a number based on a snapshot of the information in your credit report.
What is your credit report?
A credit report is the history of how you've used credit. Your creditors report to one (or more) of the three major credit reporting agencies: Experian, TransUnion, and Equifax. Here's the information often included in a credit report:
Information about past and current loans, including car, home, personal and student loans, and credit cards
How much you owe to each creditor
How long you’ve had each account
Whether you’re up-to-date on all your payments
Creditors that have checked your credit
Current and former addresses
Any legal judgments or liens against you
Bankruptcy, foreclosure, and vehicle repossession records
You can check your own credit report. Federal law requires that each credit bureau allow you a free copy of your report each year. You can get these free credit reports at AnnualCreditReport.com. That's the only website authorized to give you the copies you're entitled to by law. Check your credit reports regularly and report errors so they can be fixed and won’t negatively impact your ability to get needed credit.
What is your credit score?
Your credit report contains detailed information about how you interact with credit. A credit score uses the information in your credit report and represents a snapshot of your current situation. It’s a quick way for a creditor or someone else to get an idea of how you’ve used credit in the past.
The most commonly used credit scoring model is the FICO Score, developed by the Fair Isaac Company. The FICO Score ranges from 300 to 850. The higher your score, the more likely you are to be approved for a loan. With a lower score, you might still get a loan, but you might have to pay a higher interest rate. Here’s how FICO calculates your score, using information from your credit report:
Payment history (35%): Whether you make your payments on time and in full
Credit utilization (30%): How much of your available balances you’re using
Credit history (15%): The amount of time you’ve been using credit and how long each account has been open
Type of credit (10%): Whether you have a mix of different loans, such as credit cards, mortgages, and auto loans
New credit (10%): How many of your credit accounts are new and whether you’ve been applying for a lot of new credit accounts in a short period of time
FICO tweaks its approach for different types of loans and creditors. You have an auto loan score and it might be different from your insurance score.
FICO isn’t the only credit scoring model. The three major credit bureaus put together their own system, called VantageScore. VantageScore is used by many major lenders, but for the most part, when someone checks your credit score, they will likely use a version of your FICO score.
4 differences between a credit report and a credit score
Understanding the differences between a credit report and a credit score can help you make better decisions about your finances, particularly how you use credit.
1. Who creates them
Credit reporting agencies create credit reports. They collect information given to them and organize it into a history of how you've used credit in the past. Your credit report contains detailed information about accounts for the last seven to 10 years.
On the other hand, a credit score is created by other companies who use the information in your credit report. The major bureaus also create credit scores (VantageScores) using the information in your report, but FICO is most likely to create the score used when you apply for credit.
2. How they are created
The major credit bureaus create credit reports from information provided to them by creditors. When you get a loan, the creditor sends information about the size of the loan (or credit card limit) and when you got it. At regular intervals, the creditor sends updates about whether you’ve been making your payments on time and in full, as well as your current balance.
On the other hand, a credit score is created from the information in your credit report. The information in your report is assigned a number value that’s put into a formula. The result is your credit score.
3. Who can access them
Your credit report and score can be checked by marketers trying to decide if you qualify for an offer. That’s how you get credit card and loan solicitations in your mailbox. You have the right to opt out of prescreened offers.
Creditors you currently do business with can also check your credit. That’s how you might get a credit limit increase out of the blue on your credit card.
Otherwise, you need to give permission for others to check your credit.
Depending on the situation, providers might check your credit report or your credit score or both. Lenders usually use your credit report to decide whether you qualify, and your credit score to decide what interest rate to offer.
An employer might perform a credit check, but they don’t get access to your score. Instead, they’ll receive a modified version of your credit report that includes your identifying information and employment information. This version also includes information about your payment history and debts.
4. How they are used
Credit reports provide more detailed information. For example, a landlord might want to know if you have a recent bankruptcy, eviction, or missed payment. This can give them an idea of how you might behave with your monthly rent payment.
A credit score is more of a snapshot. It’s a measure that can be used to quickly determine whether you meet basic requirements. A higher credit score generally means that you pay your bills on time and manage your debt. A lower credit score means there's negative information in your credit history, or there isn’t enough positive data yet for a better score.
For example, a credit card issuer might have a minimum score requirement for all new accounts. The initial score check helps determine what you might be eligible for, and then a creditor can dig deeper into a credit report for more details.
Comparing credit reports and credit scores - A summary table
Although there is an 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.||✓|
Is your credit score more important than your credit report?
A credit score isn’t more important than your credit report. Both are used to determine your eligibility to borrow money or access financial services. The credit score is a way of quickly turning the information from your credit report into a numeric value that can be easily understood.
Does your credit report include your credit score?
No, your credit report doesn’t usually include your credit score.
You can get your credit score for free online. Check with your bank or credit union, or while you’re logged into your credit card account. You can also get your credit score for free from Discover or Capital One.
What’s the relationship between your credit report and your credit score?
A credit score is created from the information in your credit report. When you make an effort to build a good credit history, your credit score is often higher as a result.