An Overview of Your Credit Report and Score

Have you ever wondered how lenders know so much about your credit history? And how credit card issuers can decide to approve your application in just a matter of seconds? It's because of your credit report and your credit score — two things that creditors and lenders use to make decisions about you.

What Is a Credit Report?

Your credit report is a record of your debt accounts and how well you've managed them, including whether you've paid on time consistently.

Credit reports typically include credit cards, loans, some unpaid medical bills, debt collections, and public record entries like a foreclosure or repossession.

In addition to your credit information, your credit report includes personal information, your current and previous addresses, and your current or last known employer. Personal information includes your name and alternate spellings of your name and your date of birth. Creditors will use this information to confirm your identity but generally will not make decisions about your application based only on this information.

The bulk of your credit report is detailed information about your credit cards and loans. For credit cards, your balance, credit limit, account type, account status, and payment history are all included on your credit report. Loan balances, original loan amount, and payment history appear on your credit report.

Credit reports include a list of businesses that have recently checked your credit history. These credit checks are known as inquiries.

Your version of your credit report will show inquiries from everyone who's pulled your credit report in the past two years, including businesses who look at your report for promotional purposes. A lender's version of your credit report only shows the inquiries that were made when you put in some type of application.

How Are Credit Reports Created?

Credit reports are created and maintained by companies known as credit reporting agencies or credit bureaus. In the United States, there are three major credit bureaus: Equifax, Experian, and TransUnion. When creditors and lenders check your credit history, they'll typically pull your credit report from one or all three of these credit bureaus.

Credit bureaus partner with banks and other businesses to get your account information. Periodically, companies you do business with will send or update your account information to the credit bureaus. This includes your credit card issuers and lenders and also third-party collection agencies who've been hired to collect debts on behalf of other companies. Credit bureaus also pull information from local, state, and Federal courts to include in the public records section of your credit report.

There are businesses you have accounts with that don't report to the credit bureaus because the accounts you have with them aren't credit accounts. For example, the companies that provide your electric, cell phone, cable, and internet service do not regularly report your account or payments to the credit bureaus. Prepaid cards, debit cards, and checking account information is also not reported to the credit bureaus and not included in your credit report.

While some businesses don't update your credit report with your monthly payments, they will notify the credit bureaus if you become seriously delinquent on your payments.

Who Can See Your Credit Report?

Thankfully, not just anyone can access your credit report. Federal law states that a business or individual must have a “permissible purpose” to check your credit report. Generally, this means the business must need to see your credit report to approve an application you've made, to collect on a debt, for certain employment purposes, to comply with a court order, or to underwrite insurance. Section 604 of the Fair Credit Reporting Act lists all the legal permissible purposes for checking your credit report.

You have the right to see your own credit report. In fact, each consumer is entitled to a free credit report each year from each credit reporting agency. You can order your free copy of your Equifax, Experian, and TransUnion credit reports by going to

You can also get a free credit report directly from the credit bureaus if you've been denied for credit in the last 60 days (because of information in your credit report), you're unemployed and planning to look for a job in the next 60 days, you're currently receiving government assistance, you have been a victim of identity theft, or have inaccurate information on your credit report.

What to Do About Credit Report Errors

Credit bureaus aren't perfect. Neither are the businesses that report to them. It's common for credit reports to have errors and one of the best reasons for checking your credit report is to make sure it's accurate.

You have the right to an accurate credit report. So, if you see an error on your credit report, you can dispute it directly with the credit bureau. You can dispute an error online, by phone, or via mail. Once the credit bureau receives your dispute, they'll investigate with the information furnisher (the business that reported the error) and correct your credit report based on the results.

What About Late Payments or Other Negative Information?

Negative information, like late payments or collection accounts, can be listed on your credit report as long as it's accurate. Thankfully, most negative information will fall off your credit report after a certain amount of time.

Most negative information can stay for seven years, but certain types of information may stay longer.

Bankruptcy can be included on your credit report for up to 10 years. Unpaid tax liens are reported indefinitely. Lawsuit judgments may be reported through your state's statute of limitations, if that time period is more than seven years.

Credit Score Overview

So where does your credit score fit into all of this?

It can be difficult, not to mention time-consuming, for a business to read through your whole credit report to make a decision about you. So, they use your credit score, a three-digit numerical summary that sort of “grades” your credit report information. Your credit score is a quick indicator of the likelihood that you'll default on a new credit or loan obligation.

Consumers with higher credit scores are considered to be less risky borrowers than those with lower credit scores. Higher credit scores allow you to get lower interest rates on credit cards and loans, lowering the cost of having credit. Consumers with low credit scores usually have higher interest rates and might be denied for some credit cards, loans, and other credit-based services.

How Are Credit Scores Calculated?

Credit scores are complex algorithms that take all the information in your credit report, weighs it, then comes up with a number that represents how well you've managed your credit accounts. We don't know the exact credit scoring formula — and there's a chance we wouldn't understand it even if we did know the formula. But we do know which factors go into a credit score and how much those factors count.

The FICO score is one of the most well-known and widely used credit scores. The consumer version of the FICO score ranges from 300 to 850 and the score is calculated based on five key factors. Because some parts of your bill-paying history are more important than others, different pieces of your credit history are given different weights in calculating your credit score. Even though the specific equation for coming up with your credit score is proprietary information owned by FICO, we do know what information is used to calculate your score.

Here are the five factors, broken down by the weight given to each factor:

Payment history is 35 percent: Lenders are most concerned about whether or not you pay your bills on time. The best indicator of this is how you've paid your bills in the past.

Late payments, collections, and bankruptcies all affect the payment history of your credit score. More recent delinquencies hurt your credit score more than those in the past.

Debt level is 30 percent: The amount of debt you have in comparison to your credit limits is known as credit utilization. The higher your credit utilization — the closer you are to your limits — the lower your credit score will be. Keep your credit card balances at about 30 percent of your credit limit or less.

Length of credit history 15 percent: Having a longer credit history is favorable because it gives more information about your spending habits. It's good to leave open the accounts that you've had for a long time.

Inquiries are 10 percent: Each time you make an application for credit, an inquiry is added to your credit report. Too many applications for credit can mean that you are taking on a lot of debt or that you are in some kind of financial trouble. While inquiries can remain on your credit report for two years, your credit score calculation only considers those made within a year.

Mix of credit is 10 percent: Having different kinds of accounts is favorable because it shows that you have experience managing a mix of credit. This isn't a significant factor in your credit score unless you don't have much other information on which to base your score. Open new accounts as you need them, not to simply have what seems like a better mix of credit.

Another widely-used credit score is the VantageScore. This version of the credit score was developed by the three major credit bureaus. The most recent version of the VantageScore ranges from 300 to 850, similar to the FICO, but the VantageScore's factors are slightly different. Rather than giving us percentage factors, VantageScore reveals the level of influence each factor has.

  • Payment history: Extremely influential
  • Age and type of credit: Highly influential
  • Percent of credit limit used: Highly influential
  • Total balances/debt: Moderately influential
  • Recent credit behavior: Less influential
  • Available credit: Least influential

Where Can You Get Your Credit Score?

While you have the right to a free credit report, but there's no law that requires credit scoring companies to give you free access to your credit score. Still, it's relatively easy to get your credit score either for free or by purchasing it. This is the only place where you can purchase your FICO score. You can order your FICO score based on your credit report at Equifax, Experian, and TransUnion.

Any of the credit bureaus: You can purchase your individual and 3-in-1 credit scores from each of the credit bureaus. Each credit bureau has its own credit scoring model and may have slight variations in your credit history, so your credit scores could differ from each other and might even be different from your FICO score.

Free credit score websites: Three websites currently offer completely free, no-subscription-required credit scores. They are,, and Watch out for any free credit score that asks you to enter a credit card number. You're being enrolled in a trial subscription to a credit monitoring service. If you don't cancel before the trial ends, the company will start charging your credit card for the service.

Your credit card statement: Certain credit card issuers are participating in a new FICO service that allows cardholders to view their FICO scores for free. Discover, Barclaycard, and First National Bank of Omaha are a few credit card issuers who participate. You only have to view your monthly statement to see your recent FICO score.

Be denied for credit or approved for less favorable terms: This method isn't foolproof (or ideal), but here's how it works. Lenders and credit card issuers are now required to send a copy of the credit score used in a decision to deny an application for credit or to approve the application, but for less favorable terms than those applied for. You don't do anything to receive this credit score but put in the application. If you qualify, you receive the credit score automatically.

What Is a Good Credit Score?

Looking at your own credit score might be confusing. Some credit score providers give you an explanation for your credit score, explaining whether you have a good credit score, and breaking down the factors that contribute to your credit score. Sometimes all you get is a number and it's up to you to figure out whether that number means you have good credit or bad credit.

Keeping in mind the credit score generally range from 300 to 850, here's a breakdown of what different numbers within that range mean:

  • 800+: Exceptional. You're not very likely to become delinquent on any new credit or loan obligations. You'll probably have an easy time getting approved for credit and you'll have a lower interest rate.
  • 799 to 700: Very good.
  • 670 to 739: Good. There's a slightly higher (but still pretty low) risk of default. With a credit score in this range, you should still have a fairly easy time getting approved for credit.
  • 580 to 669: Fair. Consumers with these credit scores have a higher risk of default, many get denied for some credit cards and loans, or if approved, will have a higher interest rate.
  • 579 and below: Poor. These credit scores indicate a very high risk of default. You'll have a much harder time getting approved for new credit products with a credit score in this range.

If you don't have an excellent credit score, you can work toward it. Improve your credit score by making sure your credit report is error free, catching up on late payments, making all your monthly payments on time, reducing your credit card balances, and limiting your new applications for credit.

Learn More About Reports & Scores