Credit scores are relatively pervasive in life, and they certainly are not something to take lightly. That being said, we would be remiss if we didn’t take the time to explain the difference between your credit score and your credit report, as the two are often mistakenly conflated …
Your Credit Score
Your credit score is the numerical value attached to and reflective of your credit usage and history. This number, which generally falls between 300 and 850, is what banks and lenders will turn to when it comes time to determine whether or not you’ll have the opportunity to borrow money and, if so, at what interest rate.
That is, this is the score meant to measure and determine how fast (and whether or not you can) pay back borrowed money. This score is determined by how much money you have borrowed, how long you took to pay it back, whether or not you missed any payments, and more.
The higher the score, the lower the interest rate and the more likely it is you will be able to borrow more money in the future.
Your Credit Report
Your credit report is similar to your credit score in that it reflects your borrowing and payment history. However, where credit scores sum up and quantify the overall landscape of your credit, a credit report actually lists all of your credit transactions.
Think of a credit report as a financial resume that shows the accounts you have open, the accounts you have closed, current loan balances, payment history, the types of money you’ve borrowed (think mortgages, auto loans, or credit cards), who has made “hard inquiries” into your credit, and more.
You may also have numerous credit reports, as different reports are generated by different credit bureaus, like Experian, TransUnion, and Equifax.
More On Credit Reports
Digging a little further, it’s also important to note that credit reports detail your personal information (as in your social security number, address, and more) and can be available to more than just lenders. Insurance companies, government agencies, and sometimes employers (when given written consent) can gain access to your credit report.
Additionally, be sure to check and read your credit report every once in a while, as sometimes errors can be listed.
Finally, be aware of the effect bankruptcy can have on your credit. While many people fear that bankruptcy will hurt their credit score for years to come, this is untrue — most filers actually experience a positive bump in their credit scores after they file.
In fact, most see a rise in their credit score the same year as they filed for bankruptcy, and studies indicate that a credit score will continue to steadily rise year after year thereafter.
Your credit report, however, will show the bankruptcy filing for several years:
If you have further questions regarding how to take back control of your credit score and your finances, or if you have concerns about how bankruptcy may affect your credit report, call Dolaghan Law today at (904) 354-4935! We look forward to empowering you!