It’s a good idea to check your credit at least once a year. But when looking up information on your credit, it’s easy to be confused by some of the terminology used. You may have read or heard the terms credit score and credit report and not know the difference.
The truth is that it’s easy to differentiate between the two. This quick guide will give you everything you need to know about credit scores, credit reports and what they both tell you.
Credit Score
Your credit score is a numerical value calculated by your history of borrowing and paying back money from creditors. This value is a three-digit number on a scale of 300 to 850, with 850 being the highest.
Lenders, landlords and potential employers use this numbers to assess your credit risk and determine how likely you are to pay back money you owe, and whether or not you will pay it on time.
Factors that affect your credit score can include your payment history, the amount of money you owe or owed in the past, how long your credit history is, and how much of your allowed credit you are currently using. This score can change frequently in order to accurately reflect your current financial activity.
Credit Report
A credit report, on the other hand, is a summary of your financial activity. This report includes your history of paying bills and any other debt you owe. This information is collected by credit bureaus, which get information from credit card companies, banks and other companies.
A credit report lists the amount of lines of credit you have open and had in the past, as well as your payment history. So if you have a history of not paying your bills on time, it will show up in your credit report.
Whenever you apply for a new line of credit such as a credit card or loan, the party you hope to open a new line of credit with requests a credit report from one of the three main credit bureaus. Credit reports also include the amount of inquiries made into your credit history, which is used as a way to judge how many lines of credit you attempt to open.
If you or someone you know is bummed out by a low credit score and are wondering what is a good credit score – help is available. Credit repair can begin today.
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