What is the difference between a credit score and a credit report?


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Your credit score is one of the most important indicators of financial health because it can be used to determine a number of financial decisions, including whether or not you qualify for a mortgage, the interest rate you receive on a car loan, whether you or you can’t open a new credit card right now and even if you will be approved for the apartment you applied for.

There’s a lot to know when it comes to credit scores, and while they sound similar to credit reports, they’re not the same. However, understanding how they both work can help you figure out what habits will help you keep your information safe and be as creditworthy as possible.

Below, Select breaks down the differences between a credit score and a credit report and how you can check them both.

What is a credit report?

AN Credit report is a record that contains information about your credit activity and debt management history. The information also includes your payment history and balances on credit cards, loans, and other forms of debt, and it’s all collected from the three credit bureaus: experience, equifax Y transunion.

Beyond this, your credit report may also include information about late payments, closed accounts, and delinquent accounts. It can also show your oldest accounts, recently opened accounts, bankruptcies and foreclosures. When you apply for a personal loan, mortgage, auto loan, or new credit card, lenders use information from your credit report to determine your creditworthiness (or how likely you are to pay off a new debt).

Your credit report can seem a bit intimidating when you consider that it reveals so much of your credit history and activity. But knowing what’s on your credit report can also help you spot potential fraud. If you see a recently opened line of credit or loan account that you didn’t open yourself, this is something you’ll want to report to the credit bureaus, as it could be a sign that someone has used your personal information to open those accounts for you. your name. You don’t want to be responsible for any poor credit activity (such as missing payments or maxing out your credit), and you don’t want to be denied future lines of credit because of it.

You might even consider signing up for a credit monitoring service, which experience free offers. The service gives you access to up-to-date credit scores, spending alerts, and alerts when there are new credit inquiries and new accounts have been opened. Plus, it allows you to submit and track any disputes you make about inaccuracies in your credit report. If you want something more complete, consider IdentityForce®which also comes with identity theft insurance and dark web monitoring.

IdentityForce® UltraSecure and UltraSecure+Credit

On the secure Identity Force site

  • Cost

    UltraSecure+Credit Individual starts at $139.90/year and UltraSecure+Credit Family at $209/year. Click “More Information” for more information.

  • Monitored credit bureaus

    Experian, Equifax and TransUnion

  • Credit scoring model used

  • dark web scan

  • identity insurance

    Yes, $1 million for all plans

Terms apply. To learn more about IdentityForce®, visit their website or call 855-979-1118.

Large inaccuracies on your report can lower your credit score, which can have big ramifications, such as not being able to qualify for lower interest rates on loans and (in extreme cases) not being able to qualify for lines of credit from certain lenders altogether .

As daunting as it may seem, taking a look at what’s on your credit report is a solid first step in understanding much of your financial picture.

What is a credit score?

AN Your credit score is a three-digit number that represents what’s on your credit report. You actually have more than one credit score, as scores are calculated using a variety of different scoring models, each with its own algorithm and uses.

The most popular scoring model is known as the FICO scoring model and is used in 90% of lending decisions. Another popular model is known as the VantageScore model, and sometimes you may notice that one score is higher or lower than the other, just because the scoring algorithms are different.

Of the three credit bureaus, Experian reports your FICO 8 score and Equifax and TransUnion report your VantageScore. That’s not to say you should only look at the score reported by Experian, as it’s used more. It’s still helpful to monitor your Equifax and TransUnion scores, as a lender may choose to look at your VantageScore instead.

Your credit score generally ranges from 300 to 850 and is divided into different ranges.

For the FICO scoring model, the ranges are:

  • Very poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739
  • Very good: 740 to 799
  • Excellent: 800 to 850

And for the VantageScore model, the ranges are:

  • Very poor: 300 to 499
  • Poor: 500 to 600
  • Fair: 601 to 660
  • Good: 661 to 780
  • Excellent: 781 to 850

As you can see, the ranges can have quite dramatic differences, so it’s important to look at the credit scores of both models. In general, the higher your credit score, the more likely you are to get approved for credit cards and loans with lower interest rates (so you can save money on your monthly payments) and generally better terms.

Sometimes a low credit score can also make you ineligible to apply for a new line of credit altogether. That’s another reason why it’s important to make sure you know your credit score before applying for a financial product (or even an apartment rental!) that only accepts good or excellent credit.

In addition to the scoring algorithm, there are five main factors that go into your credit score.

  1. Payment history (35%): If you have been making payments on time every month for each of your open credit accounts. Of the five factors, payment history makes up the largest part of your score.
  2. Amounts due (30%): This is the total amount of credit and loans you are using compared to your total credit limit, and is also known as your utilization rate. Lower utilization can contribute to a higher credit score. Experts generally recommend aiming for a utilization rate of no more than 30% (ie, if you have $10,000 in credit available to you, use no more than $3,000).
  3. Length of credit history (15%): This is the average amount of time you have had credit accounts open. The longer you’ve kept an account open, the higher your average credit age and the higher your credit score.
  4. New credit (10%): This explains how often you apply for and open new accounts.
  5. Credit mix (10%): The variety of credit products you have, including credit cards, installment loans, finance company accounts, home loans, etc.

There are a few things you can do in each of these areas to make sure you’re adopting good credit habits to boost your score as much as possible.

For example, if you’ve never had a credit account before, you’ll want to start building your credit as soon as possible; Don’t wait until you’re ready to apply for a home, car, or other loan for a major purchase because poor credit won’t provide lenders with enough clues about your creditworthiness.

Instead, you might consider opening a secured credit card, like the Discover it® Secured Credit Card or the Discover it® Cash Rebate for Students (if you are a student and this is your first credit card). These cards come with no annual fee and are intended for people who need to start building their credit.

Discover it® Secured Credit Card

On Discover’s secure site

  • rewards

    Earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, get unlimited 1% cash back on all other purchases, automatically.

  • welcome bonus

    Discover will match any cash back you’ve earned at the end of your first year

  • Annual quota

  • Introductory APR

  • ordinary APR

  • Balance Transfer Fee

    3% initial balance transfer fee, up to 5% fee on future balance transfers (see terms)*

  • Foreign transaction fee

  • credit needed

Discover it® Cash Rebate for Students

On Discover’s secure site

  • rewards

    Earn 5% cash back on everyday purchases at different places each quarter, like Amazon.com, supermarkets, restaurants, gas stations and when you pay with PayPal, up to the quarterly maximum when activated. Plus, get unlimited 1% cash back on all other purchases, automatically.

  • welcome bonus

    Discover will match any cash back you’ve earned at the end of your first year

  • Annual quota

  • Introductory APR

    0% for 6 months on purchases

  • ordinary APR

  • Balance Transfer Fee

    3% initial balance transfer fee, up to 5% fee on future balance transfers (see terms)*

  • Foreign transaction fee

  • credit needed

And while accepting new lines of credit can help your credit score, you should be careful when submitting new credit applications. This is because every time you apply for a new line of credit, the lender runs an extensive inquiry on your credit report, which can cause you to be temporarily affected. Applying for too many new lines of credit at once can have a negative impact on your credit score, so be sure to plan ahead when deciding when to apply for that new credit card or when to take out that debt consolidation loan.

How do you see your credit score and credit report?

You can check your credit report for free once every 12 months by going to Annual credit report However, due to an increase in credit fraud since the COVID-19 pandemic, you can access free weekly reports from all three credit bureaus through April 2022.

You can also sign up for experience to view your FICO score and credit report and scores from the other two bureaus as well. Capital One also offers free credit monitoring through Capital One CreditWise®.

For a more comprehensive service, check out Select’s ranking of the best credit monitoring services.

Catch up on Select’s in-depth coverage of personal finance, technology and tools, welfare and more, and follow us on Facebook, Instagram Y Twitter to be updated.

For Discover it® Secured Credit Card rates and fees, click here.

For Discover it® Student Cash Back fees and charges, click here.

Editorial note: Any opinions, analyses, reviews, or recommendations expressed in this article are solely those of Select’s editorial staff and have not been reviewed, approved, or otherwise endorsed by any third party.

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