Credit Report Vs. Credit Score

One common misunderstanding is differentiating your credit report and your credit score. Lenders use the numbers from both to determine the likelihood that you will make payments as agreed in your contract. Lenders that use your credit report and your credit score include credit card companies, apartments, car loans, and mortgage. Your credit report holds information on all your past credit history. The data that gets collected is used to determine your credit score.

Your credit score is a three-digit number that lenders, such as those mentioned above, use to determine how safe or how much of a risk you may be as a customer. The range is typically between 300 and 850. Credit scores are determined based on how much debt you owe, history of repayment, if you have any marks for being late, and how long you have had your credit accounts. It is common for your scores to fluctuate based on your account activity.  There are different scoring models used to determine your score. Some even use your income to calculate your credit score.

Here is a general look at credit score ranges:

• 300-579: Poor

• 580-669: Fair

• 670-739: Good

• 740-799: Very good

• 800-850: Excellent

It is important to strive for a higher score because you will receive more favorable credit terms such as lower interest and lower payments. Credit scores will vary depending on what model was used. Not all creditors report to all three bureaus (Experian, TransUnion, and Equifax). Some creditors may only report to two or none at all. They may also calculate your medium score from all three major credit bureaus.

  Your credit report is a statement that provides information about your lines of credit and your payment history but does not contain your credit score. Your credit report is compiled by the three major credit reporting companies (Experian, TransUnion, and Equifax). These are also known as bureaus or consumer reporting agencies. Lenders will use these reports to determine if they want to loan you money and it helps them determine the interest rate you will receive. Other businesses that use credit reports are renters, insurance agencies, and utility services. Your employer may also run a credit report to make employment decisions about you.

Credit reports will contain:

 Personal Information:

• ·         Name

• ·         Address

• ·         Social Security Number

• ·         Date of Birth

• ·         Phone Numbers.

 

Credit Accounts:

• Current Accounts and Accounts History

• Credit Limit/ Amount

•  Account Balance

Collections

Public Records

•    Foreclosure

•   Civil Suits

• ·Bankruptcies

 

Reports can sometimes have errors. It is important to check your credit report. If you find any mistakes, it is imperative that you report these errors right away. Everyone is entitled to a free credit report once a year. Find your free credit report at

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