Credit Scores and Credit Reports – Two Different Things, But What’s the Difference?
Your credit report contains information about your credit activity, current credit status, and historical credit information. It contains all the information about your loan payment history and the status of your credit accounts. It also includes other information reported to the credit bureaus, such as current and former addresses, your employer, inquiries, collection records, and public records.
There are three credit reporting agencies, or credit bureaus, in the United States: Experian, Equifax and Transunion. Each reporting agency compiles your credit information from various reporting sources, such as banks and credit cards, into a credit report.
Your credit report does not include information about your marital status, income, bank account balance, or level of education. Your credit file, however, may include your spouse’s name if reported by a creditor.
Your credit score is a three-digit number calculated based on information in your credit report – basically, summarizing your borrowing and repayment history.
Your credit score is based on five main factors:
- 1. Payment history: That’s a big deal! It takes into account whether you have paid your bills on time.
- 2. Credit Usage: This is a measure of how much debt you have.
- 3. Length of credit history: The longer you have credit, the better.
- 4. Types of credit: You want a healthy mix of accounts.
- 5. Credit Research History: Excessive credit research can negatively impact your score.
Your credit score is also affected by accounts you have jointly, but there are no joint credit scores.
If you co-sign for someone on a loan or a credit card, it affects both of you, regardless of who is actually responsible for the debt. Having this joint debt will also affect your debt ratio when applying for a loan. Be sure to keep this in mind before signing with anyone. You are both equally responsible for the debt.
Monitoring your credit report and credit score is essential for detecting identity theft and fraud. Knowing what should and shouldn’t be there can help you spot the signs earlier and take action if something fraudulent happens. Knowing more about the basics of your credit report and credit score helps you stay in control of your financial situation.
Emily Mays is Vice President/Administrative Director of Community Spirit Bank in Red Bay, working in finance for 15 years. She is an enthusiastic social media marketer, advocate for financial literacy and a proponent of going local.