Skip to content
United Settlement
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
Professional Debt Relief Programs
Logo
United Settlement
phone icon 888-574-5454
client icon Client Log In
  • More
    • About Us
    • Reviews
    • Contact Us
    • Debt Settlement
    • Debt Consolidation
    • Debt Management
    • Business Debt Relief
    • Credit Card Debt Relief
    • Debt Relief by State
    • FAQs
    • Blog
    • Sitemap
Qualify For Debt Relief
Professional Debt Relief Programs
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
United Settlement » What is the Difference Between a Credit Score and a Credit Report?
marcel May 13, 2019

What is the Difference Between a Credit Score and a Credit Report?

From early adulthood, many of us are encouraged to build a strong credit score and profile. This can be accomplished early on by taking out a low-limit unsecured credit card and using it responsibly while making consistent timely monthly payments against the balance on the card.

Once a credit card account is opened and the repayment process begins, the credit card issuer reports all activity to the three major credit bureaus – Experian, Equifax and TransUnion. All borrowing and repayment activity is compiled by the three major credit bureaus and assembled into credit reports that become part of an individual’s credit profile.

As information compiled in credit reports accumulates over time, it is then utilized to calculate a credit score. Credit scores play an important role in the consumer economy by helping lenders determine the risk level associated with extending credit to a particular individual.

The most widely referenced credit score is the FICO credit score, created by the Fair Isaac Corporation, and it ranges from 300-850, with scores above 700 considered very good to excellent. Let’s take a closer look at credit reports and credit scores

What Information is Included in a Credit Report?

A credit report represents the summary of an individual’s financial behavior including borrowing history, debt repayment history and other bill paying history.

Banks, credit card companies, finance companies and some utility services provide information regarding the type of account, type of debt, outstanding balances, repayment history, account age, and any collections activity.

Additional information related to any potential lenders who have requested access to the credit report via a “hard pull” when the individual has pursued credit is also included. Any previous lawsuits related to debts will appear on a credit report, as will any bankruptcy filings.

Credit reports include information related to all accounts – including those that have been closed. Given the amount of information included within a credit report, they are often lengthy – ten pages or more. Individuals are entitled to three free credit reports per year at annualcreditreport.com, where you can access your credit report from each of the three major credit bureaus.

Credit Scores

If credit reports were a book, a credit score would be the book summarized into a single word. Think of the credit score as all of the information contained within the credit report being boiled down into a single number – the FICO credit score.

It is the strength or weakness of this number – an individual’s FICO credit score – that will have a direct bearing on the likelihood of being granted credit at attractive terms through an unsecured credit card, personal installment loan, auto loan or home mortgage.

FICO credit scores can also influence a potential landlord’s decision to rent to a potential tenant, as well as an employer’s hiring decision. Obviously, a lot rides on the strength or weakness of a credit score. But, how exactly does all of the information included in a credit report translate into the calculation of a three-digit FICO credit score?

How are FICO Credit Scores Calculated?

There are several factors that contribute to the calculation of a FICO credit score. An individual’s ability to make consistent timely monthly payments leads the way, with an approximate 35% weighting. Late and/or missed payments have a negative impact here, but the opposite is also true.

This is why the first order of business for anyone looking to establish or rebuild a strong credit score and profile is to make timely consistent payments every month.

Next up, comes an individual’s credit utilization rate, (the percentage of total available credit that is currently borrowed) and this contributes approximately 30% toward the overall FICO score.

Credit reports display on a per-account basis the level of indebtedness and available credit for every account and this information can be aggregated to calculate the credit utilization rate, which should be maintained at under 30% to strengthen the FICO score. Lower credit utilization rates lead to higher FICO credit scores.

Meantime, the length of credit history – or the average age of open accounts – contributes an approximate 15% weighting toward an overall FICO credit score. This is why it can make sense not to close an old credit card account, even when it isn’t being used very much.

Closing accounts also negatively impacts the credit utilization rate, since doing so will lower the aggregate amount of credit available, thereby raising the credit utilization ratio.

Diversification of credit – showing a variety of forms of credit (unsecured credit cards, home mortgage, auto loan, personal installment loan) and a demonstrated ability to timely repay, contributes approximately 10% to the FICO score calculation.

Finally, the frequency (or lack thereof) of credit inquiries, the “hard pulls” that potential creditors undertake when considering a lending decision, will contribute approximately 10% to the FICO score calculation. The fewer the hard pulls, the better it is for the FICO credit score.

The Difference Between a Credit Score and a Credit Report

By now it should be clear that a credit report represents a detailed account of an individual’s personal financial history – a track record of borrowing and repayment listed for each individual account, as well as incremental important information related to borrowing inquiries, collections activity, and even bankruptcies.

The many pages of comprehensive information would be too voluminous for each creditor to analyze for each potential borrower, so the FICO credit score – with its weighted calculations based upon information included within the credit report – streamlines the process and makes life easier for everyone involved.

Creditors can quickly assess a potential borrower’s risk profile, while individuals can make adjustments in their borrowing and repayment behavior to elevate their credit score if it is not yet to their advantage.

Apply Here
Excellent

Based on 356 reviews.
Overall 4.4 out of 5 stars

View All Reviews

Buddy Ewing

December 28

Time and again, I did not know how to handle my debt

Time and again, I did not know how to handle my debt. Even when I paid my credit cards off, a few months later I was back in the same situation. But this year is different. I contacted United Settlement...

Lianne Finnegan

December 27

Business debt relief is what I needed when I contacted the United Settlement crew

Business debt relief is what I needed when I contacted the United Settlement crew. They are committed to helping people like me who requires more help with business debt problems. I had several loans out...

Wren Herrera

December 26

Student loan debt was the reason that I reached out to United Settlement

Student loan debt was the reason that I reached out to United Settlement. I had about 200K plus in student loan debt for my business degree. I recognized that I had to do something when I struggled to make...

Jardel Shah

December 20

There is nothing worse than falling ill and then having to deal with super expensive medical bills

There is nothing worse than falling ill and then having to deal with super expensive medical bills that you really do not have the patience or experience to handle. I was pleased with my experience with...

Iain Holt

December 14

I took out a few personal credit cards to open my boutique

I took out a few personal credit cards to open my boutique. When than money ran out, I went on to take out more loans for my business. However, this quickly turned into a disaster. Today, I now have a mountain...

Avaya Adkins

December 12

Who knew that auto loans were so negative for your credit lines

Who knew that auto loans were so negative for your credit lines? Especially, if they are not paid off right away. As a married couple, we had vowed to keep auto loan debt at bay. But, we found ourselves...

Lucien Rojas

December 07

I didn’t have a ton of debt when I contacted United Settlement

I didn’t have a ton of debt when I contacted United Settlement, but what I wanted from them was some information about how to handle my debt management. I knew that I needed some more information to get...

Madiha Matthams

December 04

Federal student loans were the reason I ended up at United Settlement

Federal student loans were the reason I ended up at United Settlement. I had about $200K to pay back and I was not quite sure where to tackle that debt once I got out of school. But I reached out to that...

Asim Horner

December 03

Everyone knows how horrible student loans are

Everyone knows how horrible student loans are. For me and my family, they had become more than just an annoying monthly bill. They had taken over our lives. That’s why I decided to take action and find...

Frankie Mckee

December 03

I wanted to be more informed about my own personal and business debt

The number one reason I chose to contact United Settlement was I wanted to be more informed about my own personal and business debt. When you have credit card debt, it can be extremely frustrating. Especially...

Justine O'Ryan

November 29

I cannot believe I was finally able to find a company to actually help me pay off my debt

I cannot believe I was finally able to find a company to actually help me pay off my debt! I thought I would forever be chained to debt. But United Settlement offered me multiple solutions for paying off...

Jerry Conley

November 21

What your money can do for you.

The great reviews that you have thanks.

Cathal Brett

November 19

Dealing with high interest auto loan debt was difficult for me and my wife

Dealing with high interest auto loan debt was difficult for me and my wife. We thought we got a good deal, but it actually was a horrible loan. So, we reached out to United Settlement, and they got to work...

Aliesha Ward

November 12

No one really wants to go bankrupt, and neither did my family

No one really wants to go bankrupt, and neither did my family. But fortunately, we did not have to go that route. It was our last resort, but United Settlement helped us figure out a way around bankruptcy...

Filip Rosas

November 08

I had been through about 5 different credit counseling agencies before I found United Settlement

I had been through about 5 different credit counseling agencies before I found United Settlement. I had read through their reviews and made the decision to move forward with them. I also was so impressed...

Susanna Fasenmyer

November 07

Save time and money

Just what I needed, already had a company I was working with and I switched because I was able to same some money. Brian and Alfred were really nice and helpful

Warren Hutchinson

November 07

As a business facing some unwanted financial difficulties

As a business facing some unwanted financial difficulties, we were at a loss for what to do next when our debt started to soar. We took a closer look at our financial situation by contacting United Settlement....

Bobbi O'Quinn

November 02

I had no clue how to create a debt management plan

I had no clue how to create a debt management plan and in fact, I didn't even know what a debt management plan was. Fortunately, I reached out to United Settlement before I had too much debt to tackle....

Dawn Mercer

October 31

Being burdened by debt is one of the biggest struggles we faced as a family

Being burdened by debt is one of the biggest struggles we faced as a family. But these people at United Settlement were very helpful in deciphering the different debts we had and then coming up with a debt...

Forrest Guest

October 29

Student loan debt was my worst enemy before I ran into United Settlement

Student loan debt was my worst enemy before I ran into United Settlement. I really thought I would just have terrible credit for the rest of my life because I will never get out from underneath it. It was...

Are you in debt? we can help

  • Amount
  • Contact

How much do you owe?

Related:

  • Debt Settlement
  • Tax Debt Relief
  • Can You Negotiate Your Own Debt
  • Debt Consolidation
  • Debt Management
  • Contact Us
  • 241 West 30th Street
    3rd Floor
    New York, NY 10001
  • (888)-574-5454
  • [email protected]
  • Privacy Policy
  • Terms & Conditions
  • Debt Relief Services
  • Debt Settlement
  • Business Debt Relief
  • Credit Card Help
  • Debt Consolidation
  • Debt Management
  • Student Loan Help
Learn more about debt relief


    • facebook
    • Google Plus
    • Twitter
    • YouTube
    • Instagram
    • Linkedin
    • facebook
    • Tools & Resources
    • Contact Us
    • About Us
    • Blog
    • Debt Calculator
    • Frequently Asked Questions
    • Sitemap
    • Reviews
    • Client Login
    Free Savings Estimate
    Apply Here
    Clients who stay according to debt relief program can realize approximate savings of 50% before fees, or 30% including fees, over 12 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for reasons such as: their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period. We do not assume consumer and/or business debt, provide tax, bankruptcy, accounting, legal or credit repair services/ advice. Our program is not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. If you have any additional questions please contact us.
    Copyright 2020. United Debt Settlement, LLC