You may have heard “credit score” and “credit report” used interchangeably, but these two aren’t the same thing.
A credit report is similar to a report card in school. It’s a detailed record of someone’s credit history. Credit reports show current and past credit accounts, debt, records, payment history, and requests by lenders, to name a few.
These are generated by the three national credit reporting bureaus — TransUnion, Experian and Equifax — and each bureau stores one credit report per person. You are entitled to one free copy of your credit report every 12 months from each of the three agencies, but note that each credit report may be different and you can pay for any additional credit reports throughout the year.
A credit score is completely different. It’s a number, typically ranging from 300 to 850, that measures your credit risk based on the information found in your credit report. Credit scores are calculated by FICO and VantageScore. The most commonly used score is FICO, which is calculated based on five factors found in a credit report:
- Payments (35 percent)
- Amounts owed (30 percent)
- Credit history length (15 percent)
- New credit (10 percent)
- Credit mix (10 percent)
There are many ways you can obtain your credit score. Some credit card and loan providers give them to customers, as do non-profit credit counselors and credit repair services. Or, simply buying it from FICO is one of the more common ways.
How Lenders Use Them
When working with an auto lender, they will check your credit score and pull your credit report. The credit report will show a detailed history of your payments, credit inquiries, public records and collections. Your credit score is used in determining approvals on any loans as well as the interest rates you qualify for.
Make sure you understand the difference between a credit score and credit report. Both are important, and you need to understand both when financing a vehicle.
If you're ready to finance your next vehicle, but bad credit is getting in your way, Auto Credit Express wants to help. Our network of special finance dealers has the lenders available to work with people in unique credit situations. Take the first step by filling out our simple online auto loan request form today.