People often use the term credit report and credit score interchangeably. However, these two items are completely different.
What is a credit report?
Your credit score (called a FICO score) is a snapshot of your credit through a weighted average of various debt related statistics. These include:
- Payment history
- Amounts owed
- Length of credit history
- New credit
- Types of credit used
To learn more about how a FICO score is calculated check out myFICO.
Another thing that should be noted about FICO scores is that they are not free. Some sites may claim to give you a “free” FICO score but make sure you read the fine print. Often these sites require you to register with a credit card. You get a “free” score, however you usually are enrolled in some program that will charge you after a certain grace period has expired. You may be able to opt out of this contract, but if you do decide to go this route check the fine print.
Rather than a snapshot of your current credit status, a credit report shows a more in depth view of your credit history. The information in a credit report includes:
- Personal information:
- Social Security Number
- Types of credit you have:
- Revolving credit
- Unsecured credit
- Secured credit
- short-term loan
- How long the credit has been opened.
- Have bills been paid on time?
- The amount of credit currently used. Your credit limit.
- How many inquiries have been made in your report. (Every time you need new credit your report is checked. You can use this as an indicator to see if any suspicious inquiries have been made.)
- Bankruptcies, foreclosures, ect…
Get Your Reports Annually
By law, everyone is entitled to a free credit report at least once a year. There are plenty of sites where you can get this report. The site I use is Annual Credit Report. Annual Credit Report gives you an opportunity to check the three major credit report bureaus:
While there are others, these are the bureaus that major institutions use to determine your credit worthiness.
What I do With My Reports
Since you can only request a report once a year, I spread out the requesting of my reports. Ever four months; January, May and September, I request a report for me and my wife from one of the bureaus. It’s important to remember that because you can only request a report once a year, you must wait a full 365 days before asking for another free report. I always write down the date and the bureau I request the information from. That way I know when to request the new report.
There are two reasons my wife and I check our reports. First, it helps us to ensure that our personal information has not been used to open new accounts. Second, it allows us to check for inaccuracies. While accurate information, no matter how unflattering it is, cannot be removed from a report it is important to request that inaccurate information is removed. For more information check out Free Credit Report’s: Fraud Alert.
How do you ensure your credit is safe?
Photo Provided By: Don Hankins
I am not a financial professional. The opinions for included in this article are mine alone and meant for entertainment purposes. Check with a professional before making any major financial decisions. For more information check out our disclaimer policy.