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Credit scores and credit reports play an important role in eligibility for everything from loans and credit cards to apartment rentals and certain insurance policies. Credit scores are calculated based on the information in your credit report, but there are key differences in how the two are used. For this reason, to truly understand your finances, you need to have a complete understanding of your credit score and your report.

To help you navigate each of these important concepts, we’ve summarized how your credit score and credit report work, how they’re each used by creditors, and how you can access them.

Vs credit score. Credit report: main differences

A credit report provides detailed information about a consumer’s finances, while a credit score is calculated based on the information in that report. So, although these tools are different, they are inextricably linked and the two are used by lenders and other institutions to assess the creditworthiness of applicants. Therefore, to increase your credit score, examine every element of your credit report for errors and identify areas for improvement.

What is a credit score?

A credit score is a three-digit number used to indicate a consumer’s creditworthiness or the likelihood that they will pay their bills on time. Each consumer has a FICO score and a VantageScore, although FICO scores are more commonly used by lenders, and there are several versions suitable for different types of products. Credit scores typically range from 300 to 850, with scores of 670 or higher classified as “good” and ratings of 800 or higher considered “outstanding.”

How credit scores work

Credit scores are calculated based on information in a consumer’s credit report, such as their payment history, credit age, and credit composition. Scores can be calculated by FICO and VantageScore, as well as proprietary algorithms developed by individual banks or institutions. In general, the factors used to calculate a credit score are taken from the consumer’s credit report, and each represents a defined percentage of their score. FICO scores are calculated based on the following categories:

  • Payment history. As the most impactful part of a credit score, payment history accounts for 35% of the calculation. This part of the algorithm includes on-time payments and any derogatory marks resulting from late payments or non-payment.
  • Amounts due. Also known as credit usage, the amounts owed on a consumer’s accounts, compared to their total credit limits, make up 30% of a credit score calculation.
  • Length of credit history. The length of time a borrower has had their credit accounts translates to 15% of their credit rating. The longer a consumer has had active accounts in good standing, the stronger this part of their credit profile.
  • New credit. Applying for a new loan or credit card usually results in a thorough investigation of the consumer’s credit report. These inquiries represent 10% of the credit score calculation.
  • Credit mix. Completing the bottom 10% of a consumer’s credit score, the credit mix matches the types of accounts a borrower has. Consumers with more diverse debts, such as a mix of revolving and installment accounts, score better in this category.

When you apply for a new credit card, loan, or even insurance, the provider will check your score to assess your overall creditworthiness and your likelihood of making payments on time. This is usually done through a serious credit check, which can cause your score to drop temporarily.

What are credit scores for

Credit scores are used by lenders, credit card companies and other financial institutions to assess the risk posed by a potential borrower. Likewise, collection agencies use credit scores to assess whether a consumer is likely to pay off an overdue account. Some owners also look at an applicant’s score to assess their financial responsibility. Likewise, insurers use credit-based insurance scores to gauge the odds that a potential insured will file a claim.

How to check your credit score

There are several convenient ways to check your credit score and keep tabs on your creditworthiness:

  • Credit rating sites. Visiting a free credit rating website is one of the easiest and most convenient ways to check your credit score. These services, which update weekly to monthly, sometimes offer credit monitoring in addition to limited scores and reports. Checking your credit through these websites is usually free, but some platforms offer additional tools for a monthly fee.
  • Credit card providers. Many credit card issuers also offer free credit scores and odds prediction tools to cardholders. Simply check with your card provider to see if the service is offered, then sign up to access the resources available.
  • Nonprofit credit counseling. Beyond just checking your score, working with a nonprofit credit counselor can help you better understand your credit profile and adopt more responsible financial habits.

What is a credit report?

A credit report is a complete record of a consumer’s credit history that includes current and past lines of credit, payment histories, third-party collections, lender inquiries, and public records such as bankruptcies and repossessions. Each consumer has three reports, one compiled by each of the three major credit bureaus. Notably, however, credit reports do not include a consumer’s credit score.

How a credit report works

Credit bureaus collect all of a consumer’s credit activity as reported by lenders and other creditors. The offices also keep a history of consumer personal information and relevant public records. Reports are generally the same from office to office, but some content and formats may vary. Additionally, the information in each report may vary, as not all creditors report to the three bureaus.

What are credit reports for

As with credit scores, lenders and credit card issuers use credit reports to gauge the likelihood that an applicant will pay off their debt on time. Credit reports are also used by insurers to calculate exclusive insurance scores and by collection agencies to guess which accounts a borrower will pay off first.

Employers can use amended reports provided by offices to prevent fraud and avoid negligent hiring claims. Finally, homeowners can use credit reports to assess applicants and determine an appropriate security deposit amount.

How to get your credit report

To access a copy of your credit report, visit AnnualCreditReport.com. Traditionally, consumers can access a free copy of their credit report from each loan officer once every 12 months. However, following the Covid-19 pandemic, borrowers can access a copy of each report every week until April 20, 2022.

Increase your FICO® score instantly with Experian Boost ™

Experian can help you increase your FICO® score based on paying bills like your phone, utilities, and popular streaming services. Results may vary. See the site for more details.


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