The Difference Between Credit Score and Credit Report

In our current economic condition in the United States of America, there has never been so much talk about credit scores, credit reports, bad credit and anything credit! Why, even several years ago when we began offering credit repair services to a few special clients, we had to literally take our clients by the hand and educate them about the credit and borrowing system and how it impacts their everyday lives! Fast forward to the 21st Century and we still get questions about how to know the difference between credit scores and credit reports. First of all, let’s explain what a credit report is. Basically a credit report is a history of your credit activities.You create a credit record on file at a credit bureau if you have ever applied for a credit or charge account, loan, rental housing, insurance, or even a job. Your credit record basically contains information about your income, debts, and credit payment history. It can also contain information about arrests, lawsuits and if you have ever file for bankruptcy. Just as the name says it is “a report”. As an example, take a report card that you receive from most schools that indicates your academic progress. It lists all of your performance grades for each class by letters such as “A” for excellent, ” B ” for above average, ” C ” for satisfactory and so on. Each letter grade in many schools carry a point value, for example an A is 4 points, B is 3 points which allows the school to calculate your overall grade point average, or a sum total of your grades. Once all of the grades in your report card have been reported, a grade point averge is computed in order to give you a number that represents your overall academic progress for those classes. In credit terms, that number, like a grade point average, is a credit score! Although there are many credit reporting bureaus, there are three main ones that are used by most creditors and lenders, TransUnion, Experian, and Equifax. The credit bureaus maintain a history record of your credit activity and are regulated by The Federal Trade Commission. Your rights on how your credit information is used can be found in The Fair Credit Reporting Act. Credit scores are bit more complex to define since they depend on factors that vary from each credit score provider as well as the information maintained by each of the “Big Three” Credit reporting bureaus mentioned above. A definition of a credit score is that it is a numerical expression based on a statistical analysis of a person’s credit files maintained at the credit bureaus, to represent how creditworthy a person is. Just as there are many credit reporting agencies, there are a few credit score providers, but for this article we will refer to one of the largest and widely used, FICO which stands for Fair Isaac Company.  A FICO credit score ranges from 300 to 850, with 850 being best. This is just a little clarification of the difference between credit report and credit score. Remember, if you need to view your credit reports, you can get them for free without any hidden terms at annualcreditreport.com The free credit reports from annualcreditreport.com are available once a year from each of the three main credit bureaus, Experian, TransUnion and Equifax. Be sure to check back as we go more into fixing bad credit! Good luck! Contributed by: MyCreditClean.com