Getting your credit score and credit report is like having a health check-up for your financial well-being.
Just as regular visits to the doctor help you monitor your physical health, keeping tabs on your credit score allows you to assess the health of your financial profile. And just as a medical check-up reveals potential issues or areas for improvement for you physically, your credit history provides insight into your financial habits, debts, and repayment history.
Now that we’ve established the importance of your credit score and credit report, what else should you know? Let’s take a look at the most frequently asked questions about credit scores and credit reports.
There are multiple credit score models used by lenders to determine creditworthiness. The FICO Score is used by 90 percent of leading lenders and is the global standard for measuring credit risk. A FICO score is calculated by five factors:
This information is obtained from each of the three credit bureaus: Experian, Equifax, and TransUnion. Credit report information from each bureau, as well as how that information is weighted, differs between scoring models and is the reason scores can vary significantly.
Some scoring models are used for educational purposes only and are not used by lenders.
Here are the different types of credit score:
- FICO – FICO is the most widely used credit scoring model. FICO Scores generally range from 300 to 850.
- VantageScore – VantageScore was created by Equifax, Experian, and TransUnion and is widely used by banks, fintechs, and other financial institutions. VantageScore scores generally range from 300 to 850.
- Educational or bureau-specific scores – Some credit scores are provided directly by a credit bureau or through a credit monitoring service for educational purposes. These scores may use different scoring models and can differ from the scores a lender sees. For example, Equifax says its educational credit score model uses a range of 280 to 850.
Understand that the scores you receive may not be the same scores a lender sees. This depends on the credit scoring model, the bureau used, and the type of credit you apply for.
Lenders also look at factors that are not contained in credit reports when determining creditworthiness, such as income and length of time at your present employer.
It is important to check your credit reports regularly to monitor for fraud or errors that could be affecting your credit. Federal law entitles you to one free credit report every 12 months from each of the three nationwide credit bureaus — Experian, Equifax, and TransUnion — and you can also access free weekly online credit reports through AnnualCreditReport.com.
Some services also provide credit scores, credit monitoring, and identity protection tools in addition to your credit report. Keep in mind that these extras are separate from the free reports available through AnnualCreditReport.com.
Credit reports are broken into four sections: personal information, public record information, credit history, and adverse accounts (negative marks).
- Personal information contains your name, social security number, date of birth, current and previous addresses, your spouse’s name, and your employment data.
- Public record information may include certain court-related financial events, most notably bankruptcies.
- Credit history includes your lines of credit (mortgage, auto loans, credit cards, etc.), credit limits and account balances, monthly payment information, and status of the accounts (open, closed, paid, inactive, etc.).
- Adverse accounts are any debts that were paid late, have an outstanding balance, or have been sent to a collection agency and reported to the credit bureau(s).
Many websites offer credit report summaries, which is not a full credit report. A benefit of summaries is an easy-to-read format that can still provide the primary information contained in a report.
A summary can give you enough information to regularly monitor your credit with advice on how to improve your scores, but it is advised to receive a full report from each bureau at least once annually.
No. Checking your own credit report or credit score does not hurt your credit score. When you review your own credit, it counts as a soft inquiry rather than a hard inquiry, so it has no impact on your score. In fact, checking your credit regularly can help you catch errors, monitor changes, and spot signs of fraud or identity theft early.
Your credit report and credit score can influence everything from loan approvals to interest rates, which is why it pays to review them regularly. By checking your credit reports, understanding how your score is determined, and watching for suspicious activity, you can stay informed and take action before small issues become larger problems.
Whether you use a free report service or a paid monitoring tool, the goal is the same: to protect your credit and make more confident financial decisions.
