What’s the Difference Between a Credit Score and a Credit Report?
Your credit scores and credit reports are two important (and interconnected) parts of your financial health. Unfortunately, not everyone knows the differences between a credit score and credit report, how they’re calculated, or even how to find them.
A good credit score takes years to build, but can be destroyed in seconds by poor decisions, missed payments, or financial fraud — a situation that is unfortunately becoming a reality for millions of Americans.
According to a survey from FICO (one of the credit scoring models) [*]:
Nearly 40% of Americans said their personal information was used to open new financial accounts — putting their credit scores at risk.
Whether you’re looking to take out a loan, manage your debts, purchase a vehicle, or move into a new home, your credit reports and scores are invaluable.
In this guide, we’ll explain everything you need to know about your credit scores and credit reports so that you can stay financially healthy and spot the early warning signs of fraud.
Credit Score vs. Credit Report: What You Need To Know
The difference between a credit score and a credit report is that a credit report is a running history of your credit activity, while a credit score is a three-digit number based on that activity which represents your creditworthiness.
While this system sounds relatively straightforward, the reality is a bit more complicated.
First off, every person has multiple different credit scores. Lenders use different information and credit scoring models (usually either FICO or VantageScore) depending on their needs — for example, a mortgage lender will base its score on your payment history and debt load to make sure you can handle taking on payments.
Next, you also have multiple credit reports, which may or may not contain the same information. There are three major credit reporting agencies — Experian, Equifax, and TransUnion. However, not every lender reports activity to all of them.
With so many different factors at play, it’s not always easy to get a single accurate picture of your financial health and spot the warning signs of financial fraud.
For most people, the predominant factor isn’t what their credit score is or what their credit report includes — it’s how this data is used by lenders.
Do Lenders Look at Your Credit Score or Credit Report?
Under the Fair Credit Reporting Act (FCRA), financial institutions can legally pull and review your credit report whenever they have “a permissible purpose.” This includes insurance underwriting, credit transactions, account review or collections, and the opening of new accounts [*].
Lenders almost always calculate their own credit score based on the information they pull from your credit report. However, this may not be the same as the credit score you see in apps and tools.
Here’s what lenders look at when deciding your creditworthiness:
- The data in your credit report. Each section on your credit report influences a lender’s decision. For example, most lenders will focus heavily on your payment history to see if you’re a reliable borrower. Missing payments and significant unpaid debt make you more of a credit risk — damaging your credit score. To get a complete picture of your financial health, lenders may also take your employment history and income into consideration [*].
- The type of product you’re applying for. Lenders want to see that you have prior experience with the type of loan you're applying for.
- The scoring model they use (VantageScore or FICO). Scoring models weigh the information on your credit reports differently. For example, using the FICO model, your payment history accounts for 35% of your FICO score, while your credit mix (the different types of credit accounts you have) only accounts for 15% [*].
The bottom line: Your credit score can change dramatically if incorrect or fraudulent information ends up on your credit report. To maintain good credit, it’s always a good idea to sign up for three-bureau credit monitoring.
Credit Reports: What They Are and How To Understand Them
A credit report is more than just a history of your accounts and payments — it is an early warning system that something is harming your financial well-being.
Here’s what you need to know to stay on top of your credit reports:
How many credit reports do you have?
You don’t have a single credit report. Instead, there are three major credit reporting bureaus that maintain records of your credit history — Experian, Equifax, and TransUnion.
It’s important to keep tabs on your credit reports at each of the three bureaus, as some lenders only report or check information at one or two of them. For example, if fraudsters manage to take out a loan in your name and it only appears on one of your credit reports, you may miss the warning signs until it’s too late.
What information is included on your credit report?
Your credit report is divided into these main categories:
- Personal and employment information: This includes Personally Identifiable Information (PII) such as your name, date of birth, and Social Security number (SSN). It can also include information about current and former employers.
- Credit history: This includes the types of credit accounts you have, credit limits, payment history, etc.
- Credit inquiries: This includes both soft inquiries (from credit checks and monitoring) and hard inquiries (from credit applications).
- Public records: This includes information about bankruptcies and some other publicly available information.
- Consumer statements: Some companies include a section in which you can explain negative information in your file. While it may not affect a lender’s opinion, it lets you justify hard inquiries, large outstanding amounts, or civil judgments on your record.
If you see errors on your credit report: Investigate and report them immediately. Incorrect information can harm your credit score or be a warning sign that you’re the victim of identity theft.
How do you read a credit report?
Credit agencies often use codes to designate date indicators, manners of payment, account designators, and business classifications on your credit report.
Pay special attention to any numbers, letters, or symbols next to specific accounts, as those demarcations could be mistakes that impact your credit score.
Here are guides on how to read these codes for each of the three major credit bureaus:
How do you get a free copy of your credit reports?
Until December 2023, you can get a copy of each of your three credit reports every week at AnnualCreditReport.com.
When you make a request, be prepared to confirm your identity with your name, address, date of birth, SSN, address, and answers to questions only you would know (like your mortgage payment amount).
Credit Scores: How To Get Them and How They’re Calculated
Credit scores affect the kinds of loans you can reasonably get and the rate at which you’ll have to pay them back.
Here’s what you need to know about credit scores:
How are credit scores calculated?
Credit scores are calculated using information from your credit report — but each lender uses different scoring methodologies and has different criteria when granting credit. For example, some may weigh payment history more heavily in their calculation, while others care more about how much debt you have.
What is considered a “good” credit score?
While lenders use different methods to create your credit score, they follow a similar pattern when determining the “quality” of your credit score.
Here is a general guideline to how lenders categorize your credit score:
- A “fair” credit score is between 580 and 669
- A “good” credit score is between 670 and 739
- A “very good” credit score is between 740 and 799
- An “excellent” credit score is 800+
People with fair credit scores are considered “subprime borrowers” and will likely have trouble getting loans [*]. Keeping your balance below the limit, rarely applying for credit, paying off your debts quickly, and disputing errors on your credit report can boost your credit score.
What’s the difference between VantageScore and FICO credit scores?
VantageScore and FICO are two different approaches to calculating credit scores.
Both VantageScores and FICO scores range from 300 to 850, but each model weighs certain information differently. For example, no late payments may contribute 155 points on VantageScore, but just 150 on FICO [*]. Your VantageScore may also drop more significantly than your FICO score if you’re shopping around for a loan and have multiple hard inquiries.
To qualify for a FICO score, your credit report must display an active line of credit for at least six months. VantageScore only requires one tradeline present on your report, regardless of age.
Why do you have more than one credit score?
Unfortunately, there is no single universal credit score.
Instead, you have at least three credit scores (one each from Equifax, Experian, and TransUnion), and may have more from other lenders.
Banks and lenders don’t always report their findings to all three nationwide reporting bureaus, which could cause discrepancies between your scores [*].
How do you get your credit score for free?
Beware of “free credit report” or “credit repair” websites — they might be credit report scams. Criminals create fake websites to steal your personal information.
How To Repair or Improve Your Credit Score
- Review your credit reports for errors and mistakes
- Dispute any incorrect or fraudulent account information
- Remove hard inquiries from your credit reports
- Lower your credit utilization score
- Maintain old accounts (and keep up with your bills)
- Report rent, utility, and other payments
- Actively monitor your credit for signs of fraud
If your credit score is low or your report shows errors, there are steps you can take to fix them. Here’s how to repair or improve your credit score:
1. Review your credit reports for errors and mistakes
Errors in your personal information, missed payments, or even fraudulent accounts and transactions can show up on your credit report and damage your credit score. For example, if someone uses your SSN to take out a loan in your name, it will show up on your credit report.
How to review your credit report for errors and mistakes:
- Check your personal information. Are your name, address, SSN, and phone number correct? While these won’t necessarily impact your credit score, they can cause confusion or even be warning signs that someone has altered your information and is trying to steal your identity.
- Look for unexpected accounts or hard inquiries. These are signs that someone has, or is trying to, apply for a loan or open new credit card accounts with your personal information. Catching hard inquiries early is critical, as they decrease your credit standing and stay on your report for up to two years [*].
💡 Related: How To Read a Credit Report →
2. Dispute any incorrect or fraudulent account information
Nearly a third of all Americans have found at least one error on their credit report [*]. These can be honest mistakes or signs of fraud — either way, they need to be corrected.
Common errors and mistakes on your credit report include:
- Closed accounts reported as open
- Reporting you as an “owner” of an account rather than just an “authorized user”
- Incorrect account balances or credit limits
- Incorrect identity data — such as your address, name, and phone number
- Accounts listed more than once or with incorrect payment history
If you find any errors on your credit report, you’ll need to send a credit dispute letter to the credit bureaus. Include your personal information, the account number of the tradeline you’re disputing (credit card, auto loan, or mortgage), dates of disputed information, and the type of disputed information.
Write a detailed account of the error you found and attach any supporting documentation — such as confirmation of account closure or balance payoff, and billing statements. Consider using this template from the Federal Trade Commission (FTC), and make sure you send your letter within 30 days of noticing the error (and via certified mail).
3. Remove hard inquiries from your credit reports
Hard inquiries occur when a lender requests to review your credit report. Applying for a new credit card, apartment rental, student loan, or any other line of credit will count as a hard inquiry.
Unauthorized hard inquiries can happen if:
- A lender hasn’t gotten your permission to access your credit report
- Equifax, Experian, or TransUnion make an error on your credit report
- A scammer opens a line of credit in your name
Each hard inquiry shaves up to five points from your FICO score [*]. To protect your credit score, you should remove unrecognized hard inquiries from your report by contacting the original lender or disputing it through the bureaus.
4. Lower your credit utilization score
Credit utilization refers to the amount of available credit that you use. Say, for instance, your credit limit is $10,000. If you regularly use $1,000 of it, your utilization would be 10%. Your overall credit utilization is a combination of the balances on all of your lines of credit divided by your credit limits.
Credit utilization is one of the main variables used to calculate your credit score. So the less available credit you use, the better. Ideally, your utilization should be well below 30% (and 10% is excellent).
How to lower your utilization:
- Monitor your credit card spending. The easiest way to manage your utilization is to track how much you’re spending. Set up balance alerts with your credit card issuer to be notified if your utilization starts to escalate. Pay down any debt you can in order to reduce your balance before your monthly bill arrives.
- Request higher limits. Increasing your limit will lower your utilization. If you’ve had a relatively positive payment history, call your credit card issuer and ask for an increase. But keep in mind that doing so can result in a hard inquiry, which can cause a dip in your credit score.
- Become an authorized user. Adding yourself to a friend or family member’s account can increase your credit limit, as well. But make sure that person has healthy personal finance practices. Their poor credit score can lower yours.
5. Maintain old accounts (and keep up with your bills)
Your credit history is another factor in determining your credit score. Keeping old accounts open — even ones you opened years ago — can benefit your credit score. Paying off your cards consistently for years shows banks you’ve been a good borrower.
Maintaining old accounts can also impact your credit utilization. If you have open balances on multiple credit cards and close one, your balance will be a bigger percentage of your overall credit limits [*].
6. Report rent, utility, and other payments
The bureaus don’t always include rent and utility payment information on your credit reports — but keeping up with these can be an easier way to show your payment history.
Some bureaus now offer services to track these payments (such as Experian’s Boost feature). Beware of third-party services that promise to auto-add bills to your credit reports, as they often have steep sign-up and management fees and can become a source of credit report errors.
7. Actively monitor your credit, and sign up for fraud alerts
Checking your credit throughout the year can help you find flaws in your credit report, but it also helps you detect fraud.
Here’s how to monitor your credit:
- Take advantage of free reports. Typically, each of the three bureaus gives you one free credit report every year; so strategically, you would want to request one at three points throughout the year to get a clear picture of your credit — and to check for fraud. (The CFPB’s checklist is a fantastic guideline for what to look for.) Until December 2023, you can get a copy of each of your three credit reports every week at AnnualCreditReport.com.
- Place a fraud alert. Doing so will require lenders to take steps to verify your identity before opening new accounts or increasing your credit limits. You can place alerts online for Equifax, Experian, and TransUnion, but you don’t have to do so at all three. The bureau you contact is legally obligated to notify the others. Upon submitting your alert, you’ll receive a free copy of your credit report from each bureau [*].
- Invest in credit protection. Look for credit monitoring apps that cover all three bureaus and also protect you against identity theft. If you’re at high risk of health issues or losing your job, consider purchasing credit insurance to suspend your debt. Beware that insurance fees are based on your loan or credit card balance.
Is Credit Monitoring Worth It?
Credit monitoring can notify you of changes to your credit report so that you can dispute errors and shut down scammers before they damage your credit score. But, if you’re able to get free credit reports from the bureaus, why pay for a service?
The main difference is that paid credit monitoring services offer peace of mind by monitoring your credit reports 24/7. If anything comes up, you’ll be alerted in near-real time so that you can take action.
Many credit monitoring services are also bundled with identity theft protection, digital security tools, round-the-clock support, and insurance policies to cover you in the event that you become a victim.
Unfortunately, not all credit monitoring companies offer you the same level of service.
Here’s what to look for in a quality credit monitoring and identity theft protection provider:
- Three-bureau credit monitoring: Some services only track your credit report at one of the bureaus or charge more for three-bureau monitoring. Every Aura plan tracks your credit report at all three bureaus.
- Fast fraud alerts: To shut down fraud, you need to be able to act quickly. A 2022 mystery shopper survey found that Aura had the most reliable fraud alerts and notified users up to 250x faster than other services3.
- Regular credit score updates: You should be able to get regular credit scores (monthly and annual). Aura offers monthly VantageScore updates to keep you on top of your credit score.
- Credit lock: A credit lock is a paid service that allows you to block all access to your credit file (and stop scammers from using it). Aura allows you to lock and unlock your Experian credit file with a single tap from the Aura mobile app.
- 24/7 U.S.-based support: If you need help, Aura’s team of White Glove Fraud Resolution specialists are available 24/7.
- Identity theft insurance: Many services offer insurance to cover losses — such as for legal fees and stolen funds. Aura plans cover up to $5 million in eligible losses due to identity theft.
- Digital security and identity theft protection tools: Many credit monitoring services are bundled with other tools to proactively protect your identity and finances. Aura’s all-in-one solution has been rated #1 by Money.com, Tech Radar, Forbes, and more. You can try Aura free for 14 days to see if it’s right for you.
💡 Related: The 11 Best Credit Monitoring Solutions in 2023 →
Creditworthiness Can Be Complicated. Aura Can Help.
Both your credit report and credit score are critical pieces of your financial puzzle. But keeping them healthy requires constant monitoring that busy professionals often don’t have time for.
Let experts do the heavy lifting for you, and consider signing up for Aura’s all-in-one intelligent safety solution. With Aura, you get three-bureau credit monitoring, the industry’s fastest fraud alerts, and award-winning digital security and identity theft protection.