Credit Report vs Credit Score (Difference Explained)

If you lived in the United States for any period of time and you’re over the age of 18, you’ve probably heard of the terms credit report and credit score. Many use these terms interchangeable, but there is a big difference between the two. We will explain the difference between your credit report vs credit score in much detail below.

Credit Report vs Credit Score (Difference Explained)

Your credit report and your credit score are two different things. Your credit report contains information about your credit cards and loans. This information is compiled by the three major credit reporting bureaus (Transunion, Equifax, and Experian) and includes your payment history, the number of open accounts that you have, and the balances on your accounts. Your credit score, on the other hand, is a number that’s calculated using the information contained with your credit report. Your credit score offers creditors and lenders with a mean to evaluate your creditworthiness.

So, you should be aware that your credit report does not contain your credit score. Your credit report only contains information, such as your open accounts, closed accounts, your payment history, your account status, the balances on your accounts, and any negative information, such as missed payments, charge offs, repossessions, and foreclosures.

In the United States, there are three major credit reporting bureaus (Transunion, Equifax, and Experian) to which your account information is reported. Creditors and lenders typically choose one to two lenders and they report your account status to them.

The information contained in your credit report is often different from one credit reporting bureau to another. This is so because creditors and lenders often only report to only one or two of the credit reporting bureaus and not all three of them.

Your credit score depends on the information contained in your credit report. The more positive information in your credit report, the better your credit score will be. If you have negative information in your credit report, your credit score will be lower.

Your credit score is calculated by applying a mathematical algorithm to the information contained within your credit report. The most popular scoring algorithm that’s used to calculate credit score is the FICO Score Model. Under this model, you are assigned a credit score that ranges from a low of 300 to a high of 850.

The better and more positive the information in your credit report, the higher your credit score will be. The higher your credit score, the more creditworthy you will be. The better your creditworthiness, the more likely you are to be approved for the credit cards and loans that you apply for and the better the terms and interest rate will be.

The FICO credit reporting model is not the only model available, there are other models that offer consumers credit scores, such as VantageScore. The same logic applies with each model, the higher your credit score, the better your creditworthiness.

All credit scoring models measure you creditworthiness by assessing the following factors:

  • Payment history (35% of your credit score)
  • Account balances / Credit utilization (30% of your credit score)
  • Age of your accounts (15% of your credit score)
  • How many credit applications you’ve submitted / hard inquiries (10% of your credit score)
  • Credit Mix (diversity of your accounts) (10% of your credit score)

All scoring models look at the same factors, but assign different weight to each of the factors just listed.

So long as you use credit responsibly and make all of your payments on time, your credit report will have positive information and you will have a good credit score. However, if you miss even one payment and have negative information on your credit report, your credit score will suffer.

Why Are Your Credit Report and Credit Score Important?

Having a credit report that has positive information and a good credit score are essential to be approved for things, such as opening a credit card, renting an apartment, taking out a mortgage to buy a home, and financing or leasing a car.

Whenever you apply for any form of credit, your creditor or lender will look at the information in your credit report to ensure that you are someone who has demonstrated the ability to borrow money and repay it on time. The better the information in your credit report, the better the terms and the interest rate you will qualify for.

The same logic applies to having a good credit score. This is so because those who have a high credit score have demonstrated responsible borrowing and repayment. Creditors are more likely to approve those who have a high credit score because they present a lower chance of defaulting on their monetary obligations. The higher your credit score, the better the odds of your approval, and the better the terms and interest rate you will qualify for.

How To Access Your Credit Report & Credit Score?

Under Federal Law, every person in the United States has the right to access his credit report once a year for free. Annual Credit Report allows consumers to access their credit reports for free once a year. That said, Annual Credit Report does not offer consumers the ability to check their credit score, it only allows them to access the information in the credit report.

That said, there are plenty of sites on the internet that allow consumers to check their credit reports and credit scores for free, one such site is Credit Karma. You can sign up for Credit Karma for free and access your credit report and credit score without paying a single dollar.

Also, some banks, such as Bank of America and Wells Fargo, allow their customers to check their credit score free. This is done through their online banking portals where you can opt in to view your credit score.

If you don’t check your credit reports, you should get into the habit of checking your credit reports periodically. When looking at your credit report, you should look for any inaccurate or incorrect information that appears on your credit report. If you find any inaccurate information, you should file a dispute with the credit reporting bureau reporting the inaccurate information. If your dispute is successful, the incorrect information will be removed from your credit report.

Also, you should check all three of your credit reports because each report will have different information since some creditors and lenders do not report your account information to all three credit reporting bureaus.

FICO Credit Score Breakdown

Your FICO credit score ranges from 300 to 850. 300 being the lowest possible credit score and 850 being the highest credit score you can achieve. The higher your credit score, the better the odds of you being approved for credit and the better the terms and interest rate will be for the account you’re approved for.

Here is how your credit scores are classified:

  • 800 to 850 – Exceptional
  • 799 to 740 – Very Good
  • 739 to 670 – Good
  • 669 to 580 – Fair
  • 579 to 300 – Poor

Who Can Check Your Credit Report and Credit Score?

You are the only person who can see your credit score and you are the only person who can authorize others to view your credit score and credit report. Here are some common circumstances where you would want to authorize another person to view your credit report and credit score:

  • Applying for a credit card
  • Applying to finance or lease a car
  • Applying for a job
  • Applying for a home loan
  • Applying for a student loan
  • Applying to rent an apartment

Bottom Line

By now you should know the difference between your credit score vs credit report. You have three different credit reports from each of the major credit reporting bureaus. Each of your credit reports contains information on your credit and loan accounts. Your credit score, on the other hand, is a three digit that’s calculated using a mathematical algorithm that’s applied to the information found in your credit report.

Have a clean credit report and good credit score is important because it is difficult, if not impossible, to get approved for credit cards and loans without having a good credit score. If you are approved with a bad credit score, you will not qualify for good terms and you will likely pay a ton of additional money in the form of interest.

So, if you have a credit card or loan, you should make sure to make all of your payments in full and on time so that you can build good credit. Failing to make even one payment on time will cause a significant drop in your credit score.

Credit Score Planet Frequently Asked Questions

1. What is more important your credit score or credit report?

Your credit score and credit report go hand in hand. The better the information in your credit report, the better your credit score will be. So, both matter equally as much.

2. Which credit report is most accurate?

There is no credit report that is more accurate than the other. That said, some credit reports may contain more or less information depending on which of the credit report bureaus your lender or creditor reports your account status information to. For example, some lenders will report the information to all three credit reporting bureaus (Experian, Transunion, and Equifax), whereas other creditors may only choose to report to one of the credit reporting bureaus, such as only reporting to Transunion.

3. Is there a difference between credit score and credit report?

Yes, there is a difference between your credit report and credit score. Your credit report contains information about your accounts and credit history, it does not contain your credit score. Your credit score is calculated by applying an algorithm to the information contained in your credit report.

4. How can I improve my credit score?

You can improve your credit score by making all of your payments on time, paying down the balances on your accounts, keeping old accounts open, refraining from applying for too many credit cards and loans within a short period of time, and periodically checking your credit report and disputing any inaccurate information you find.