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Credit Score Versus Credit Report: What You Need to Know

Credit score. Credit report. What’s the difference?

Both represent your financial “health.” Lenders, landlords, insurance providers, and even some employers look at your credit when deciding whether to work with you. So when it comes time to finance a vehicle, apply for a mortgage, rent an apartment, or switch employers, your credit matters.

The Difference Between a Credit Score and Credit Report

What’s Your Credit Score?

Your credit score is a summary of your overall financial health. It’s a three-digit number ranging from 300-850. Scores on the higher end are better and show a lower risk to lenders. Those with higher credit scores are more likely to qualify for better interest rates and terms.

Your FICO score is the most used credit score. FICO scores are determined using information from the three major credit reporting agencies: Equifax®, Experian®, and TransUnion®.

Your FICO score is determined by the following:

  • Your payment history
  • How much you owe
  • Length of your credit history
  • Your different types of credit (credit cards, mortgages, installment loans, etc.)
  • Number of new credit accounts and/or applications

What’s a credit report?

A credit report is a detailed history of your credit over the years. It lists specific information about your past bills, debt, and payments.

The credit reporting agencies (Equifax, Experian, and TransUnion) collect your financial information from banks, credit cards, lenders, service providers, and employers. The details of the information gathered makes up your credit report.

A credit report includes your legal name, address, and social security number. It lists all your accounts (even older ones), amounts owed, history of your payments, past due payments, collections, tax liens, and bankruptcies. When your credit report is checked (or “pulled”) by a creditor, such as a lender or credit card company, this is also noted on your credit report.

When are Your Credit Score and Credit Report Used?

When you apply for a loan, insurance policy, rental unit, employment, or utility services, businesses often want to check your credit information.

They will use your credit score for a quick overview of your credit to weigh their risk. Your credit score can determine if you qualify for a loan or policy, your rates, and terms.

Businesses use your credit report for a detailed credit history. With a report, they get a more in-depth picture of your financial health (and a better idea of their risk).

It is becoming more common for potential employers to check applicants’ credit reports (not credit scores). But employers can only do so with the applicant’s permission.

Federal laws limit who can access your credit information and what specific information they can access.

How Do you Check your Own Credit?

You can order a free credit report three times a year. Every 12 months, you get a free copy of your report from each of the three leading credit reporting agencies (Equifax, Experian, and TransUnion). If you check one every few months, you can keep an eye on your report throughout the year.

To get a free copy of your credit report, go to AnnualCreditReport.com. This will not impact your credit.

If you find mistakes on your credit report, contact the credit agency where you found the error. You can do this online or through regular mail. Describe the mistakes in detail. The credit agency is required to respond within 30 days of notification. (Sending the information through snail mail is best so you can use certified mail for proof of delivery.)

You can check your credit score through many major credit cards for free if you have accounts with them. Also, sites such as Experian, Transunion, Nerdwallet, Credit.com, and many more will give you a credit score estimate. Keep in mind, these sites have you sign up for an account, and they will try to upsell you on credit and identity protection products.

You can keep a close eye on your credit report and score by using a credit monitoring service.

Get Financially Healthy

There are things you can do to maintain or improve your credit. Besides checking your credit reports, staying on top of your finances will result in better credit reports and scores.

Tips for maintaining and improving credit:

  • Pay your bills on time, every time
  • Prevent bills from going into collections
  • Ensure low balances on credit cards and other revolving credit
  • Pay off loans or credit cards when you can
  • Don’t cancel credit cards you’ve had for a long time (age of credit counts)

 

Whether you’re selling or buying a home, the process can feel intimidating and overwhelming. But it doesn’t have to. At Coluzzi Real Estate, we answer all your questions and simplify the process. We’re here for you every step of the way. Please don’t hesitate to contact us today!

2019-03-27T12:09:31-06:00

About the Author:

Amanda has lived in the Des Moines area since 1999, where she and her husband have bought and sold a handful of homes over the years, including a recent flip. Amanda enjoys writing, obsesses about personal finance and is fond of looking at houses. She loves sharing useful tips and info to make life easier for anyone wanting to buy or sell a home. In her spare time, Amanda cherishes time with her family, volunteers with IHYC, gardens, hikes, and practices TaeKwonDo. You can read more of her writing at whywemoney.com