What is a Credit Report and Credit Score?Key Details You Need To Know

what is a credit report and credit score

Learn What is a Credit Report and Credit Score?

Ever ask yourself the question what is a credit report and credit score?  Some folks think it’s one in the same, but it’s really not.  So, this post his here to clarify the difference.

Alright, guys, it’s time to have the talk. The dreaded ‘C’ word — credit — has millennials and Gen X’s alike confused about what the heck they should be doing.

We’re here to tell you that it’s okay. It’s a tricky subject, and on top of that, it’s one that greatly impacts your financial future. You need a good credit score for a car, a house, loans, etc.

So, while it may not be the most fun topic, it’s one that you need to learn about. You don’t want to set yourself up for credit failure down the road from early mistakes.

Consider this an investment in your personal financial endeavors. If you’ve ever wondered “What is a credit report and credit score?”, then keep on reading.

man view credit score on pc

What is a Credit Report and Credit Score?

Let’s start with breaking the two down by definition so you can get a foundation. The two coincide very well, but they’re certainly their own entities.

A credit score is the number that’s attached to you right now. It’s what measures your risk or worthiness for receiving credit — at this current moment.

Much like a report card you’d get in school, it’s an indication of how you’re currently performing. A credit report, on the other hand, is much more detailed.

It provides a thorough breakdown of your credit history. A credit report is a collection of how you’ve done since the very beginning.

Credit reports and credit scores aren’t interchangeable, as they indicate different things. Depending on the type of credit, one can be more pertinent to a lender than another.

Why Are They Important?

In short, they’re both typically analyzed by a lender. That’s because they’re both an indication of your trustworthiness as a borrower.

Many feel that having a good credit score is merely enough. It’s true that you should strive to have the best score possible, especially if you were in a hole before.

But, a good credit report is much more tell-tailing to someone who’s looking to give you money. Since it provides your full history, they’ll be able to notice any inconsistencies or patterns that suggest you aren’t a good match.

Auto lenders use credit scores for calculating approval, interest rates, and loan terms. But, mortgage lenders use credit scores to determine if you’re even qualified.

But, both will also turn to your credit report to spot any red flags. If you can prove that you’ve remained in a good spot, that’s what they’re looking for.

What is a credit report and credit score to a credit card lender? Well, a report doesn’t usually impact them too much. Most advertise how they can get you approved within seconds. They take very little time to analyze.

Landlords, insurers, and even employers may want to see credit reports. However, credit bureaus will not issue credit scores to employers.

How Are They Calculated?

To fully understand what is a credit report and credit score you need to know how it’s determined. You could be making mistakes that you don’t even know about.

Credit Score

FICO, a California data analyst company, is the most common provider for calculating credit score. They analyze payment history, amount owed, length of history, new credit and your mix of credit.

Of course, these factors all carry different weight. Your payment history and the amount you owe is much more relevant to your credit score than new credit.

FICO calculates credit scores with the following variables:

  • Payment History: 35%
  • Amount Owed: 30%
  • Length of History: 15%
  • New Credit: 10%
  • Credit Used: 10%

Credit Report

A credit report is a bit more complex. It’s an accumulation of your current and past credit accounts, thus making it a more detailed read.

Credit reports are generated most frequently by Equifax, Experian, and TransUnion. These credit bureaus look at when accounts were opened, loan amounts, current balances, and payment history.

They also document any late payments or defaults, which negatively impact your score. They’ll review public records if it’s relevant, lender requests, collections, etc.

The data related to a credit report generates a credit score. Since a credit report is an all-inclusive list of your credit activity, it can be a stand-alone document.

How Can I Better My Credit Report or Score?

Working towards a better score is a never-ending goal. Once you have a great credit report, your next job is to maintain it.

Start by writing out all your credit debts, their monthly payments, interest rates, and balances. You’ll want to include student loans, mortgages, auto loans, etc.

Once you have a ballpark figure, you should try to lower your interest rates if possible. Consolidation can help lessen interest payments, which is a good option for high-rate credit cards.

scrabble words spelling refine

You could also try refinancing, but that’s certainly not for everyone. In many instances, it will lower your interest. But, it does come at a cost, so you need to make sure you fully understand the loan terms.

Also, you should just try calling your credit card companies. It may seem like a total stab in the dark, but we promise you, they can be a little more forgiving than you’d think.

It’s better to admit to them if you’re having trouble paying. Most banks will work with you as best as they can, to avoid damaging your credit.

For More on Credit Reports, Credit Scores, and All Other Credit Inquiries

Learning about personal finance is a great step to better your future. If you’re looking for more information on credit scores and reports, you’re in the right place.

At Credit Squared, we’re dedicated to helping others understand the complex financial world. We aim to educate our readers about the intelligent use of credit.

Equipped with the right information, we believe our readers can go on to make better financial decisions. Now that you know what is a credit report and credit score, keep building.

If you have any questions or comments, please don’t hesitate to reach out to use here.

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4 Comments

  1. I have had credit cards for about five years now and have never missed a payment.

    The only negative listed on my score is age of accounts is too low.

    How long does it take for this to go away, maybe 10 years?

    I can see why at 15% that this is holding my score in the mid 700’s where in my opinion it really should be higher.

    • Hi Tony,

      It seems to me that five years should be enough in terms of length of history.  However, it’s the mix that counts.

      If all account have the same age it shouldn’t be affecting your credit score. If you have some newer accounts in that mix it could be part of the problem.

      FICO measures three things when it looks at length of credit history. How long accounts have been open, how long specific account types have been open and how long since those accounts have been used. If you have closed accounts, that could impact it as well.

      Take a look a these factors and see if you can improve you credit score by focusing your efforts there.

      All the best. 

  2. Hello Patrick,

    Boy I really had no idea that there was so much of a difference between scores and reports.

    I do want to thank you for sorting out who can view one or the other and the main reason that they look at this particular one.

    One thing I really appreciated you letting us know about is that our credit scores will not be released to our employers.

    Thank you for the great information

    • Hi Melissa,

      There is definitely a difference between your credit report and credit score.

      As I pointed out in the post, each lender uses them differently.  It pays to know where you stand before you apply for any loan.

      Credit card companies look at credit differently than car lenders or mortgage lenders.  That’s why it so tough to get a mortgage loan.  One looks at risk and the other looks to see if you qualify.

      Employers can still do a background check on your credit, so it pays to keep your nose clean when it comes to managing your debt.

      Thanks for you comment.

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