When you apply for a credit card, new apartment, mortgage, or car loan, lenders will likely look at 1 of 2 things — your credit score or your credit report. Both are important to the lender for them to assess the likelihood that you’ll pay them back.
Oftentimes these terms are often used interchangeably, but this isn’t exactly correct. One is a detailed record of your past credit use and the other weighs certain factors to show your current creditworthiness.
We’ll help you understand the differences between the 2, tell you how each is used, and show you how to keep tabs on both.
What Is a Credit Score?
Your credit score is a 3-digit number that shows your creditworthiness at a certain point in time. Credit card companies, mortgage lenders, future employers, and even utility providers may look at your credit score to get a quick indication of your current financial health.
The higher your credit score, the more likely a lender is to approve you for a loan and give you favorable terms. Think of your credit score as a grade that you get periodically based on certain factors like payment record and credit utilization. We’ll go into all of these factors below.
Bottom Line: A credit score is a number that indicates your current likelihood to pay a loan back.
Who Makes Your Credit Score and How Many Exist
There are 3 major credit bureaus (Experian, TransUnion, and Equifax), that create credit reports. This information is then used by numerous other methods to create a credit score. The most widely used credit score is the FICO Score, but other types of credit scores, like VantageScore and credit scores specific to insurance companies, also exist.
You will definitely have more than 1 credit score at a time. This happens because companies can create their own credit score for you by weighing factors from your credit report differently. Also, some lenders report to all 3 major credit agencies, but others report to only 1 or 2, so the information used to determine your score might not even be the same.
Since FICO is the most common, we’ll start here by discussing how the scoring works and what factors go into it.
Your FICO Score is made up of 5 things that are weighted in terms of importance to potential lenders. These items come directly from your credit report and include:
- Payment history (35%)
- Utilization (30%)
- Length of credit history (15%)
- Credit mix (10%)
- New credit (10%)
FICO Scoring Range:
- Exceptional: 800-850
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 300-579
A good or exceptional credit score can help you get the lowest interest rates, the best terms for credit cards or loans, and access to cards that have the most lucrative credit card rewards programs.
If you fall into the fair or poor credit range, you may be required to open a credit card secured by collateral, be hit with higher interest rates, or find it difficult to convince lenders to lend you money at all.
Hot Tip: If you have fair or poor credit, there are ways to improve your credit score.
The VantageScore is a credit score jointly developed by the 3 major credit bureaus. It can take less time to establish a VantageScore than a FICO Score since VantageScore can produce a score with just a month or 2 of a consumer opening a credit account while FICO Scores require 6 months of credit history.
Your VantageScore is made up of the same general factors as a FICO Score, but are weighted a bit differently:
- Payment history (40%)
- Length of credit history and credit mix (21%)
- Utilization (20%)
- Balance (11%)
- New credit (5%)
- Available credit (3%)
This scoring model uses the same factors as a FICO Score, so if you have a good score on one, you’ll likely have a good score on the other.
- Excellent: 750-850
- Good: 700-749
- Fair: 650-699
- Poor: 600-649
- Bad: 300-599
Other Scoring Models
There are also versions of your credit score that are made for certain items, such as auto loans, mortgages, or insurance. The foundation of these versions is the same as the base of the other versions noted above, but they are fine-tuned based on industry-specific risk behaviors.
Experian, Equifax, and TransUnion each provide numerous FICO credit scores to lenders, and frequently offer updates to their models. Having these tailored types of scoring models helps lenders evaluate thousands of applications quickly and impartially.
Bottom Line: Credit scores can’t exist without credit reports since they are developed with the information found on credit reports.
If you’re interested in learning more about how you can work on improving each area of your score, be sure to look at our comprehensive guide to credit scores.
How You Can See Your Credit Score
If you plan on getting a new credit card or applying for a mortgage, it’s a good idea to know your credit score in advance to get an idea of how a lender might size you up. Besides, keeping an eye on your score lets you see any sudden drops that could alert you to an error or even identity theft.
Credit reports that you can request for free from the major credit card bureaus don’t typically contain your credit score, so you’ll have to access your score in different ways.
The most common ways are:
- Your Credit Card, Bank, or Loan Company — Many companies have started providing credit scores for their customers. It may be listed directly on your monthly statement or you can access it online by logging into your account. You may have to “opt-in” for this service, so be sure to look for it!
- Purchase Credit Scores — For a fee, you can purchase your credit score from each of the major credit bureaus or another provider, such as MyFICO.com.
- Use a Credit Score Service or Free Credit Scoring Site — Some sites provide a free credit score to users, such as Mint, Credit Karma, or Credit Sesame. These may require a monthly membership.
Who Else Can See Your Credit Score and Why
Your credit score is pulled by lenders whenever considering approving you for a credit card or line of credit. This means that there are a lot of circumstances that require a business to look at your credit score.
Here are some common entities that might look at your credit score:
- Credit card companies
- Mortgage lenders
- Auto lenders
- Student loan lenders
- Insurance companies (although it is usually an insurance-specific score)
- Collections agencies
What Is a Credit Report?
Your credit score reflects the information found in your credit report. Knowing the factors that contribute to your score doesn’t necessarily shed light on all the details behind your specific credit history. For that, you’ll need to turn to your credit report.
Like we suggested earlier, if your credit score is a grade, then your credit report is your transcript. It contains all of the details concerning your financial behavior.
If you’re delinquent on any of your bills, your credit reports will show it. If you’ve ever had an account go into collections or filed for bankruptcy, that will appear on your credit report, too.
It also shows information about the number of accounts you have open and any outstanding balances. If you have too many accounts open, it can show a lender that you are over-extended and may not be able to pay back future loans, for instance.
If you’ve been diligent in paying off your account balances timely, this will reflect very well on your ability to continue to do so in the future.
Hot Tip: If you’ve never had credit accounts, you probably don’t have any credit reports yet.
Who Makes Your Credit Report and How Many Exist
TransUnion, Equifax, and Experian are the 3 bureaus that create and maintain credit reports. They issue credit reports to creditors, insurers, and other businesses as permitted under law.
How You Can See Your Credit Report
You’re entitled to a free copy of your credit report from all 3 bureaus at least once every 12 months. AnnualCreditReport.com is the official place to request these credit scores, so be sure to obtain and look over these periodically. If you’ve been the victim of identity theft or a data breach, you can get a report more often.
Reports vary since a business doesn’t have to report to all of the bureaus — or any of them, really. And it’s not necessarily the bureau’s fault if the information is incorrect or missing. The lender may have also erred in reporting or transmitting the data.
Bottom Line: Each report may be slightly different, so it’s important to look at your report from each of the 3 bureaus.
Who Else Can See Your Credit Report and Why
The following organizations can look at your credit report either with your written consent or because federal law allows it:
- Mortgage lenders
- Governmental agencies (regarding things like child support or due to a court order)
- Student loan lenders
- Potential employers
- Insurance companies
- Cell-phone providers
- Utility companies
- Collections agencies
Now that we’ve broken down what credit scores and credit reports are, we’ll highlight some of the main differences between the 2.
- Credit reports are more detailed. Your credit score is a good indicator of your financial health, but it is still just a number. If you notice that your score has dropped, the only way to know why is by looking at your detailed credit report for things like missed payments, amounts in collections, or hard inquiries.
- Credit reports are the only thing you’re entitled to get for free. You can get at least 1 free credit report from each of the 3 credit bureaus annually. Regarding your credit score, if your bank or credit card issuer doesn’t offer it for free, you might have to resort to a paid credit monitoring service (we’ve noted ways to get both your score and report earlier in this article).
- Prospective employers can only check your credit report. Potential employers can pull a copy of your credit report (with your permission), however, they will not receive your credit score when they view your report.
- Credit card companies don’t usually look at your credit report. Most credit card applications are approved online within seconds, so credit card issuers depend on credit scores to determine if you are approved and your credit terms.
- Your credit report is better for catching mistakes and identity theft. Unfortunately, errors in your credit report are common. To get errors on your credit report fixed, you’ll need to contact both the credit bureau and the company that reported the information. If you notice a new account on your report that you didn’t authorize, you might be the victim of identity theft.
- Your credit score changes frequently. Creditors report your activity to the credit bureaus on a regular (usually monthly) basis causing frequent updates to your credit score. Most credit-scoring models are weighted for recent activity, so recent activity (good and bad) will impact your credit score more. On the other hand, information on your credit report remains consistent on your record until it drops off after 7 years.
Without a credit report, there would be no credit score. Your credit score is important to get a snapshot of your current financial position, but if you really want to dig into your credit and review your history, you need to review your credit reports.
Lenders and future employers can choose to use 1 or both items to get an overall picture of your financial history and creditworthiness before they decide to loan you money or even offer you a job. Knowing what information your credit score and credit reports hold can be the key to your successful financial future!