credit score vs credit report

Credit Score vs Credit Report: What Are the Differences?

If you’re planning to make a large purchase in the near future, you need to get well-acquainted with your credit score and what’s in your credit report. Unfortunately, around 16 percent of Americans don’t even have a credit score. This makes it difficult to buy some of life’s expensive essentials like a house or a car.

Keep reading this credit score vs credit report overview to learn more about what each one is (and isn’t). As a result, you’ll be more prepared the next time you make a big purchase.

What Is a Credit Score?

In the simplest terms, a credit score is a three-digit number that represents how safe or risky you are to lenders. When you take credit-related actions, your score will fluctuate accordingly.

For example, if you are late making loan or credit card payments, your score may drop. If you’ve had a credit account open for a long time and you remain in good standing, this can increase your score. Keep in mind that “hard inquiries” like applying for a mortgage can temporarily lower your score. You should try to limit these inquiries and only do them when necessary.

Credit Score Ranges

Your credit score can range between 300 and 850. The lower your number, the riskier lenders will view you. If your credit score is deemed too low, this can impact your ability to buy a car, rent an apartment, or get a credit card. Any lender can determine whether your score is too low based on their own criteria, but these are the generally accepted ranges.

  • Poor: 300-579
  • Fair: 580-669
  • Good: 670-739
  • Very Good: 740-799
  • Exceptional: 800-850

Most Americans tend to have a credit score in the “Good” range. Fortunately, there are actions you can take to help improve your score over time. Check out these DIY credit repair tips to learn more.

What Is a Credit Report?

Your credit report is a much more detailed look at your credit history. It has details about your financial history as a whole. This includes details about any loans you’ve taken out, credit cards and accounts, credit inquiries, and more.

Three national credit companies compile this information that ultimately makes up three credit reports. They are Experian, Equifax, and TransUnion.

If you’re curious to see what your credit reports include, you can request a copy of your report from each company once every 12 months, free of charge. However, be alert that there are some scam websites out there that may try to trick you into paying for an unofficial report.

To protect yourself and your information, only access your credit reports through a government-sanctioned website. You can ask your financial advisor for more information on how to safely request access to your reports.

Credit Score vs Credit Report: Understanding the Basics

Now that you’ve read through this credit score vs credit report overview, you should have a better understanding of the differences between each. By making smart credit decisions and limiting your hard inquiries, you should have nothing to worry about the next time you need to apply for a loan.

Interested in reading more tips like this? Browse through our full collection of articles before you go.

About Charlotte Joy