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Credit Reports are different from Credit Scores, although the two terms sound interchangeable, they offer different insights to lenders as to how you have handled credit in the past.
What is a Credit Score?
The simplest definition of a credit score, is that it’s a three-digit number, that provides a snapshot of your “creditworthiness”. Your score is based on a few core factors, payment history, credit consumption, the average age of your credit, your mix of credit types, and credit inquires. FICO is the most widely used credit score model. A person’s score can range from 300-850, the higher your score, the more likely a lender is to believe that you’ll pay the money back that you are borrowing.
What is a Credit Report?
Credit Scores aren’t the only thing lenders consider when reviewing applicants. If you have no credit or poor credit, the lender will see that reflected on your Credit Report. Your Credit Report contains identifying information like your name, address, and Social Security number. It also contains specific information about credit accounts that you have. Such as the date an account was open, the last date of payment, your balance, and payment history. It also contains things that are public record, like bankruptcies, and tax liens. All this information gives lenders insight into your borrowing behaviors.
The big difference between the two, is that your Credit Score, is just that, a score. It doesn’t give you any indication as to what factors contributed to the origin of that number. Whereas your Credit Report gives you specific details for things, like which months you had late or missed payments, and if an account is paid or not.
Every 12 months you can get a free copy of your Credit Report from www.annualcreditreport.com. Checking your own credit report this way does not trigger a hard inquiry, therefore pulling this report will not have a negative impact on your credit score. But in checking your Credit Report you can ensure that there are no errors and you can see what potential lenders are seeing.
*Employees of LPI Loans and our affiliates are not attorneys and LPI Loans DOES NOT provide any legal advice and users of this web site should consult with their own attorney for legal advice.