- What's the difference between a credit report and a credit score? video
- Making sense of your credit report infographic
- Does checking your own credit report affect your credit score? video
- What do you do if you find a mistake on your credit report? video
- How much impact do negative marks have on your credit score? video
- KEY TAKEAWAYS
What's the difference between a credit report and a credit score?
Your credit score and credit report are related, but represent two different views of your credit history.
What’s the difference between a credit report and a credit score? Good question. Okay, let’s start with the credit report. Your credit report is a compiled history of your accounts and payments across your credit products. That can include a car loan, credit cards, student loans, a mortgage – you get the idea. In short, it’s your life in credit.
Credit reports are maintained by each of the three major credit agencies: Experian, TransUnion and Equifax. And you can get a free copy of your credit report every year. Why? Because it’s important to keep tabs on your credit reports to ensure that there aren’t any mistakes or misunderstandings. If there are, you’ll want to take care of them.
So now that you’ve got a handle on the credit report, how does the credit score come into play? Well, a credit score is a number that helps lenders assess how well you’ve managed your financial obligations in the past.
One of the most commonly used credit scores is provided by Fair Isaac Corporation, and is commonly referred to as a FICO® score. Base FICO® scores generally range from 300 on the low end, to 850, the highest possible score.
FICO scores are calculated based on the information in your credit reports and are generally made of 5 key components.
First, there’s your payment history, which makes up 35% of your score. That’s why it’s so important to pay as much as you can, and make sure those payments are made on time. Your total amount owed, or debt to credit ratio, comes next, and makes up another 30% of your score. That’s a reflection of how much available credit you’re using. For example, if you have $2,000 in outstanding debt, but a total of $10,000 in available credit, that’s a 20% debt to credit ratio.
Now, the other 35% of your credit score is comprised of your length of credit history, which is 15%; types of credit you have, which is 10%; and new credits, accounts or inquiries, another 10%. That’s 35.
It’s important to remember that your score is probably going to be a little bit different from each of the credit agencies. While the information they collect is similar, different credit agencies may have slightly different data, timing and systems. But since all 3 credit agencies use your credit report to calculate your score, they are generally in the same range. Now that you know the difference between your credit report and credit score, why not take the next step and find out ways you can improve them.
The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its partners assume no liability for any loss or damage resulting from one's reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management.