Monday, January 5th, 2009

What is the difference between a credit score and a credit report?

I did my research and I realized that i have a good credit report standing.

I only have 2 accounts that I am currently using.
Out of those two, for one I do have a balance but I always pay my bills on time except for two times when i was late because, the credit card company gave me the wrong due dates
They did remove the late fees however.
But 7 open in total.
5 unused
Two of them are sallie mae for school
and the other
1 for victorias secret- never used it. If I do use it I pay it once the bill comes
and the other two i dont plan on using.

Does that mean I have a bad credit score?

Your credit score, more commonly known as your MyFico Score is managed by Fair Isaac & Co that's where they get the name FICO from. These guys are the authorities on Credit Score rankings and are used most prominently throughout the banking and loan industry to determine the creditworthiness of a business or an individual.

Banks lend money to people for a small fee which is usually a percentage of the overall loan. This is how they profit from loans and can continue to stay in business. However when someone doesn't pay their loans back in a timely manner, the bank loses a lot of money. When a lot of people aren't paying their loans back they run into all sorts of problems! And so for banks and other lenders to make sure they can stay in business and continue to offer loan products, a credit scoring system was developed to rate people based on the likelihood that they will be pay their loans back. People with lower scores have lower scores because their credit report has a history of missed or late payments. Enough of these entries on your credit report and not only will you have a low score but you will immediately make yourself look like a high risk to a bank with little chance of return — and in effect banks and lenders will not lend to you. So if you want a loan, the trick is to make yourself look appealing to lenders. One way to do that is demonstrating that you have enough income to pay your loans in a timely manner. Primarily, however, to make yourself look even more attractive to a lender — e.g. they will make money from you and not lose money — showing that you are responsible with your bills and debt is the only real way — and that is reflected in your credit score.

A credit report is simply a list of your credit actions and history– and even though your credit score is somewhat related the two are different. Usually credit scores are used to determine what interest rate you are eligble for…

Here are the score ranges:

* 760-850 Excellent
* 700-759 Very Good
* 660-699 Good
* 620-659 Marginal
* 580-619 Poor
* 500-579 Very Poor

Sounds like you don't know what your score is yet but I'd encourage you to find out =)

When you check it and find your score is not as high as you'd like you can use my10 steps to build your credit score quickly. I raised mine to well over 700 points fro 500 using these steps in less than a year:

1. Know and Track Your Credit Score (be sure to sign up for the free trial of your credit score monitoring listed on the article below. It really helped my get my score up.)
2. Never Miss a Payment, Starting Today
3. Never use more than 20% of your Available Credit
4. Keep Credit Cards that Have No Annual Fees Open For as Long as Possible
5. Extend Your Credit Limit on Cards You Already Have before You Get New Ones
6. Get Credit Cards that Have CashBack Rewards to Contribute to your Balance
7. Transfer Your Balance to a Credit Card with a Lower Interest Rate and a Higher Available Credit-
8. If You Think You Are Going to be FORCED to Pay a Bill Late Ask for an Extension or Payment Plan
9. Take out a Small Personal Loan and Repay it Over a Year
10. Ask Someone With Good Credit if They will Account Shadow you

When you're trying to build a solid credit score it's important to get a comprehensive view of what is actually effecting it…

Your Credit Score (also known as your MyFico score) is calculated with the following breakdown:

* 35% – Payment History
* 30% – Credit to Debt Ratio
* 15% – Credit History
* 10% – New Credit
* 10% – Credit Types in Use

If you excel in one area and lack in another, only fixing the areas which you lack are going to improve your score.

You can read more about these tips on my blog: How Can I Increase My Credit Score

* http://millionster.com/articles/debt/increase-fico-credit-score/

So, no point in trying to guess your score because the real records are out there — and surprise surprise — there are likely to be things on it that you arent aware of!

This entry was posted on Monday, January 5th, 2009 at 6:36 pm and is filed under Credit Report. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Responses to “What is the difference between a credit score and a credit report?”

shreck Says:
January 5th, 2009 at 11:57 pm

Your credit report tells you your credit score and who you owe.
References :

Meg Says:
January 6th, 2009 at 12:26 am

Your credit report is basically a listing of all your credit history…when you were late, balances, etc….much of the stuff you mentioned above.

Based on various factors…these agencies put it all together to create an actual score. The scores can range from 300 to 850. The average is probably about 690 or so.

Determining your credit score:

1. Your payment history: what is your track record? (approximately 35% of your score)
2. Amounts that you owe: how much is too much? (30%)
3. Length of your credit history: how established is it? (15%)
4. New credit: are you taking on more debt? (10%)
5. Types of credit in use: is it a "healthy" mix? (10%)
References :

SPIFIMAN1 Says:
January 6th, 2009 at 1:01 am

Credit scores are based on the following factors;

1. Payment history 35%
2. Time in bureau 15%
3. New credit 10%
4. Types of credit 10%
5. Debt to credit ratio 30%

Based on the information you furnished it's really hard to tell because you did not tell us how long you have had the accounts.

You do have 7-trade lines 5 being revolving and 2 installment accounts so that's a good mix and your debt to credit ratio should be low.

But unless the creditor removed the 2 late payments from your credit history and depending on how long ago they were this could cause your score to be lower then it should be.
References :
Finance Manager for over 7-years / 2007 Edition Consumer Action Handbook free at http://www.ConsumerAction.gov

Millionster Says:
January 6th, 2009 at 1:06 am

Your credit score, more commonly known as your MyFico Score is managed by Fair Isaac & Co that's where they get the name FICO from. These guys are the authorities on Credit Score rankings and are used most prominently throughout the banking and loan industry to determine the creditworthiness of a business or an individual.

Banks lend money to people for a small fee which is usually a percentage of the overall loan. This is how they profit from loans and can continue to stay in business. However when someone doesn't pay their loans back in a timely manner, the bank loses a lot of money. When a lot of people aren't paying their loans back they run into all sorts of problems! And so for banks and other lenders to make sure they can stay in business and continue to offer loan products, a credit scoring system was developed to rate people based on the likelihood that they will be pay their loans back. People with lower scores have lower scores because their credit report has a history of missed or late payments. Enough of these entries on your credit report and not only will you have a low score but you will immediately make yourself look like a high risk to a bank with little chance of return — and in effect banks and lenders will not lend to you. So if you want a loan, the trick is to make yourself look appealing to lenders. One way to do that is demonstrating that you have enough income to pay your loans in a timely manner. Primarily, however, to make yourself look even more attractive to a lender — e.g. they will make money from you and not lose money — showing that you are responsible with your bills and debt is the only real way — and that is reflected in your credit score.

A credit report is simply a list of your credit actions and history– and even though your credit score is somewhat related the two are different. Usually credit scores are used to determine what interest rate you are eligble for…

Here are the score ranges:

* 760-850 Excellent
* 700-759 Very Good
* 660-699 Good
* 620-659 Marginal
* 580-619 Poor
* 500-579 Very Poor

Sounds like you don't know what your score is yet but I'd encourage you to find out =)

When you check it and find your score is not as high as you'd like you can use my10 steps to build your credit score quickly. I raised mine to well over 700 points fro 500 using these steps in less than a year:

1. Know and Track Your Credit Score (be sure to sign up for the free trial of your credit score monitoring listed on the article below. It really helped my get my score up.)
2. Never Miss a Payment, Starting Today
3. Never use more than 20% of your Available Credit
4. Keep Credit Cards that Have No Annual Fees Open For as Long as Possible
5. Extend Your Credit Limit on Cards You Already Have before You Get New Ones
6. Get Credit Cards that Have CashBack Rewards to Contribute to your Balance
7. Transfer Your Balance to a Credit Card with a Lower Interest Rate and a Higher Available Credit-
8. If You Think You Are Going to be FORCED to Pay a Bill Late Ask for an Extension or Payment Plan
9. Take out a Small Personal Loan and Repay it Over a Year
10. Ask Someone With Good Credit if They will Account Shadow you

When you're trying to build a solid credit score it's important to get a comprehensive view of what is actually effecting it…

Your Credit Score (also known as your MyFico score) is calculated with the following breakdown:

* 35% – Payment History
* 30% – Credit to Debt Ratio
* 15% – Credit History
* 10% – New Credit
* 10% – Credit Types in Use

If you excel in one area and lack in another, only fixing the areas which you lack are going to improve your score.

You can read more about these tips on my blog: How Can I Increase My Credit Score

* http://millionster.com/articles/debt/increase-fico-credit-score/

So, no point in trying to guess your score because the real records are out there — and surprise surprise — there are likely to be things on it that you arent aware of!
References :
Check out some of my favorite links from my del.icio.us bookmarks – maybe they can help you out!

MyFico's Full Credit Report

* http://millionster.com/favorites/myfico

Suze Orman's Fico Kit (includes Score Simulator and Debt Eliminator)

* http://millionster.com/favorites/suzekit

30-day Trial of Credit Score Tracker with Free MyFico Score

* http://millionster.com/favorites/scorewatch

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