What is the Difference between a Credit Score and a Credit Report?

Many people use the term credit score and credit report interchangeably. Although mistaking them may seem harmless, credit scores and credit reports are very different. As stated in the name, your credit score is exactly that, a score. This score is a numerical value that is calculated and used by lenders to determine the risk associated with giving a borrower a loan.

The formula most often used to calculate a credit score takes into account a person’s payment history, amount owed, length of credit history, new credit and type of credit used. A person may receive a different credit score from each lender or reporting agency because the formula used to calculate the credit score will vary. The reason for the variance is because there are different types of credit score scoring models such as FICO, the most commonly used right now, and VantageScore, which both lenders and consumers are starting to use more often.

On the other hand, a credit report is a report of a person’s credit history. A credit report will include information such as a person’s social security number, current and previous addresses, and employment history. Besides this, a person can find a list of their lines of credit such as credit cards, student loans and mortgages, the date each one was opened, credit limits, and whether their accounts are past due or in good standing. Bankruptcies will also appear on someone’s credit report as well as the names of companies that have recently asked to see the person’s credit report.

Overall, it is also important to check your credit score in order to know where you stand, credit wise, and to be prepared for any outcomes on your credit applications. It is also important to remember to check your credit report to catch identity theft. A person should also check the credit reports from all three credit bureaus to ensure that all three credit bureaus have accurate information. As stated earlier, a credit score and a credit report are not the same thing, but they are closely related. The reason for this is because the information on a credit report is used in the calculation of a credit score.

Written by: Lesly Luna, Financial Wellness Peer Educator, University of Illinois Extension, 2017.

Reviewed by: Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension, 2017.

What happens if I get declined for credit?

So, you’ve gotten declined for a credit card…Now what?

Each time you apply for credit, whether it is a credit card or a loan, it is called a “hard inquiry.” This stays on your credit report for two years. While getting declined credit will not negatively impact your credit score or history, a bank or lender will look at the number of “hard inquiries” you have; the more you have, the riskier you are. However, it is important to note that if you are looking for specific types of credit, like an auto loan or a mortgage, multiple inquiries will count as only one for credit scores.

It’s also important to understand why you were declined in the first place. Reasons can include: having too low of an income, owning too many credit cards, a record of late payments, being in collections, or having limited credit history. If you are denied credit, a lender is required to tell you why within 60 days of your application being rejected according to the Equal Credit Opportunity Act (ECOA).

If you’re still interested in learning more about this topic, check out these resources: “Credit Inquiries: Hard Inquiries and Soft Inquiries” and “Choosing the right card and what happens to credit scores if you are declined.”

Written by Alex Ziskind & Andrea Pellegrini, University of Illinois USFSCO Student Money Management Center

What is my credit score? Why is it important? How do I check my credit report?

What is a credit score?

A credit score is typically a three-digit number based on your financial history to analyze and determine your creditworthiness. The higher your score, the better off you are! Credit scores are used by lenders (banks, credit card companies, etc) to gage your financial responsibility based on your past financial behaviors. Credit scores are calculated from information in your credit report. Things that affect your credit score, both positively and negatively, are paying bills late or on time, the type of credit you use, how much credit you have available to you, how much you owe on your credit cards and loans, how long you’ve held outstanding credit (how long you’ve had a credit card, for example), and whether you’ve had a lot of inquiries from prospective lenders.
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