The Difference Between a Credit Score and a Credit Report

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The Difference Between a Credit Score and a Credit Report

Credit Reports

A credit report provides a detailed record of your credit history. Companies and creditors report how you have managed the past and current accounts you have with them. The most important thing your credit report shows is whether or not you have repaid your debts on time and according to the contract you have with the business or creditor.

Your credit report is a snapshot of your credit history at the moment it is requested. It shows things like the kind of credit accounts you have, what your credit balances and limits are, and most important, whether your payments have been on time or late. Your report may also include debt-related public records such as bankruptcy, tax liens or civil judgments.

Additionally, your credit report shows your identifying information—your name and mailing address—used to match the account information to your credit report. There is also a list of inquiries on your Experian credit report, which is a record of who has requested your credit report in the last 25 months. Your credit report does not include information about assets like your income or savings or checking accounts, or other personal information such as gender, religion, medical history or political affiliation.

Who Has Authorization to Look at Your Credit Report?

Not just anyone can look at your credit report. The federal Fair Credit Reporting Act, called the FCRA, restricts who can get your report and under what circumstances. Organizations can only get a copy of your credit report for the following reasons: to open or review credit accounts to determine whether the account holder is still within the terms of the account, to make firm offers of credit, for employment purposes (with your written permission), to underwrite insurance, to EVALUATE YOUR APPLICATION FOR CREDIT or other services, with a court order or grand jury subpoena, to evaluate the risk of an investor, and to determine eligibility for government licenses. Of course, you can also get a copy of your personal credit report.

Credit Scores

Your credit scores can mean the difference between being denied or approved for credit, or paying higher rates and fees. They are numbers calculated using the information from your credit report and that help lenders predict the risk that you will not repay a loan as agreed. Credit scoring models take into consideration many factors. The most important are your payment history, how much you have charged compared to your credit card limits (your utilization ratio), how long accounts have been opened and the types of credit you have, how you have managed your existing debts recently, and whether you have applied for or taken on new debt recently.

GOOD CREDIT SCORES can save you money by helping you qualify for lower interest rates on loans and reduced fees for things like an apartment security deposit or establishing utility service. Knowing your credit scores is critical because it gives you an idea of where you stand in terms of your credit risk. Getting a score before applying for credit allows you to minimize surprises during the loan approval process. However, it will likely be a slightly different score than what the lender pulls because there are several scoring models available. The better your credit scores, the better the terms you are likely to receive when you apply.

While credit reports and scores are different, they can each give you a snapshot of your financial well-being and help you identify what you need to work on to improve your creditworthiness.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

2 Comments

  1. Shauna Perkins says:

    I never thought about the importance of my Credit Score and or my Credit Report, until i received a bill in the mail for a credit card I did not have :O ..

    I called this company and it was explained to me that someone may have stolen my Identity and taken out the credit card. They pulled my credit report and I then realized how badly it was affected by this theft.

    Thanks to Fast Credit Options, all these were removed and my name cleared!

  2. paula says:

    I remember when i was denied for a loans, but THANKS to this company who helped me to get my credit score raised i was able to get the loans i applied for.

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