Difference Between Credit Score and Credit Report

Many people use the term credit report and credit score interchangeably and this is incorrect.

A credit report contains the information that goes into calculating your credit score.
A credit score is the 3 digit number used to place your credit profile into various risk categories.

Think of a credit report as a list of ingredients that go into making a cake, where the cake is your credit score. If the ingredients are bad, the cake will most likely be bad as well.

By federal law, U.S. consumers are entitled to one free credit report per year from each of the bureaus. This does not entitle you to a free credit score however. To get an actual credit score, one must pay a fee to a credit score service. A credit score can also be obtained when applying for a loan from the lending institution that pulled your information.

The credit report will contain identifying information about you such as your name, address and Social Security Number. In addition to this information it will list items that will be used to calculate your credit score.

Here is a list of items that you will find on a typical credit report:

1. Credit Accounts (trade lines) - a list of loans, credit cards and other loans you have opened. The report will list the type of account it is, the age of the account, the balance, and the payment history.

2. Credit Requests (inquiries) - As you apply for credit, you allow creditors to look at your credit history. This is known as Hard Inquirys and in most cases it will have an effect on your credit score. Soft Inquiries result from inquiries that you did not authorize such as an inquiry for a pre-approval by a lender for marketing purposes. Soft Inquiries do not affect your credit score.

3. Collections and Public records - a list of your collections accounts, bankruptcies, tax liens, foreclosures, and other usually nasty things you wish did not show on your credit report.

All of the information on your credit history is reported by your lenders or is collected from public records. Since there are three major credit agencies working independently and not in sync with each other, it is very likely that some information is included on one report but is missing from another.

Now that you know that credit reports contain the information that is used to calculate your credit score, you should not be surprised to hear that a fluctuation of as much as 20 points can be expected when your score is calculated on the same day but with credit reports coming from different agencies.