The Difference Between A Credit Score And A Credit Report

by Allison Wignall on June 23 2021

A credit report is a detailed record of your debt management history. The information in your report will help calculate your credit score. Both together speak volumes about whether or not you can handle debt responsibly. When you apply for any line of credit, prospective lenders will first check your credit score and credit report. This is to weigh the likelihood that you’ll make all payments as agreed. Here’s a more detailed look at the differences between a credit score and a credit report.

What Is a Credit Report?

A credit report is essentially a history of your credit use and your ability to handle debt. Credit bureaus cannot just list any information on your credit report. What can and cannot be listed is governed by laws and regulations. Entries are broken up into categories such as personal information, credit inquiries, open and closed accounts, and public records.

Your credit report will typically contain detailed information about payment information related to current and past debts. This will include the payment history of currently active loans and credit cards as well as loans that are already paid off in full. This history reflects whether all payments were made on time as agreed or whether they were made past the due dates. Where payments were late, the report also indicates whether the payments were made 30, 60, or 90 days after the deadline.

Other details that a credit report may reflect include:

    • Delinquent accounts turned over to a collection agency
    • A home foreclosed by a mortgage lender
    • A vehicle repossessed by a financial company,
    • An earlier bankruptcy

Together, all of these individual items reveal a lot about the way you use your money. It helps lenders decide if they can trust you enough to extend your credit.

What Is A Credit Score?

A credit score is a 3-digit number that ranges from about 300 to 850. This number represents your creditworthiness and you can see it after analyzing the data in your credit report. Lenders use your credit score to determine your likelihood of repaying your loan on time. A higher score means you are more responsible with money and can repay the money on time. Having a high credit score makes it easier to gain loan approval. 

These 5 items listed on your credit report have the biggest impact on your credit score:

    • Payment history – A record of consistent timely payments will boost your credit score while late payments can damage it.
    • Credit utilization ratio – This takes into consideration how much money owe compared to your total credit limits
    • Length of credit history – How long you’ve had credit accounts can impact your score. The longer your age of credit, the better your score.
    • Credit mix – This sees what types of credit you have. Handling a mix of revolving and installment credit can help improve your score.
    • New credit – Applying for new credit triggers hard inquiries which can lower your score. Several hard inquiries within a short period of time can do substantial damage to your score.

Your credit score changes your credit report gains new information. Keep in mind, your score increases with each on-time payment listed on your report and drops with every late payment.

Lenders use both, your credit score and your credit report to review your loan or credit application.

We hoped you enjoyed this article! Remember, you can and potentially lower your monthly student loan payments and save money.