Credit Score vs Credit Report
5 Min Read | Last updated: October 31, 2024
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Learn about credit scores and reports. See how they work together to give you a picture of your financial health. Learn how to check them for free.
At-A-Glance
- Credit reports are historical profiles of a person’s behavior patterns when it comes to borrowing and paying back money. The data they contain is used to generate credit scores.
- Credit scores are statistical analyses of credit report data expressed as a three-digit number from 300 to 850. They may vary based on time, reporting agency, and other factors.
- A credit limit is the maximum amount your credit card issuer is willing to extend to you before you need to pay off some of your balance.
- All three of these factor into your creditworthiness.
When it comes to managing your credit, all the different terminology may at times feel confusing. A good way to keep things straight between a credit report, a credit score, and a credit limit is to understand what each one means. Then you can better comprehend their differences as well as how they all work together.
Let’s set the table by briefly defining a credit report, a credit score, and a credit limit.
What Is Your Credit Report?
A credit report shows your history of borrowing money and repaying it. Such records include credit cards, student loans, car loans, mortgages, home equity loans, and other forms of borrowing. Credit reports also may reflect negative financial information like bankruptcies, foreclosures, and vehicle repossessions — usually referred to as “derogatory” items by credit bureaus.1
Did you know?
As an added security measure to help protect against fraud, American Express reports a reference number to credit bureaus — instead of your actual account number.
What Is Your Credit Score?
A credit score are three-digit number that aims to predict how much of a risk it would be for a lender to extend credit to a particular person. In other words, it assesses your creditworthiness. The way lenders and credit bureaus see it, the higher your credit score, the less likely you are to default on a loan. Base credit scores range from 300 to 850, with anything from the high 700s upward considered very good or exceptional. Certain specialized, industry-specific credit scores range from 250 to 900.2
Credit scores are three-digit numerical expressions of your creditworthiness, based on the information in your credit report. The higher your credit score, the more likely you’ll be approved for credit with lower interest rates.
Credit reports show your history of borrowing and repaying money to creditors, such as credit card issuers, mortgage lenders, student loan issuers, and more.
Credit Report vs. Credit Score
What exactly is the difference between a credit report and a credit score, and how do they work together?
Your credit report reflects your credit activity, from credit card balances to loan payments to credit inquiries. Your credit score is a calculation based on that activity. If this were a movie, you could think of a credit report as the screenplay, which includes notes about the acting, directing, and cinematography. Then think of a credit score as how many stars the critics give to the movie.
Three national credit bureaus generate credit reports: Equifax, Experian, and TransUnion. Each bureau generates its reports slightly differently, but key items looked at include:3
- Total outstanding debt
- Your history of repayment
- Your monthly payment history, including whether you made those payments on time, late, or not at all
Credit reports typically look back at seven years of data to establish creditworthiness. In certain instances, such as a Chapter 7 bankruptcy, the credit reporting agency may go back 10 years.5 You should periodically check your credit report for potential discrepancies. You’re entitled to request one free credit report every weeks from each of the three major credit bureaus, also referred to as credit reporting agencies, at annualcreditreport.com. This may come in handy when you begin saving for a down payment on a home or another major purchase requiring a large loan.
Your credit report is used to calculate your credit score. The five main factors analyzed when generating a credit score include your:5
- Recent history of on-time or late payments
- Credit utilization ratio — the portion of your total credit limit that is currently outstanding
- Credit history — the age of your accounts
- Recent “hard inquiries” stemming from loan, mortgage, or credit card applications.
- Mix of credit types, e.g., credit cards, lines of credit, mortgage, auto loan, etc.
Creditors typically report their data to the bureaus once a month. So your credit score may fluctuate depending on when updates are sent and the score computed. Credit scores also can change as older items fall off your report and if more recent activity reflects changing borrowing habits.6
Multiple companies provide credit scores to consumers, with FICO and VantageScore being the two main scoring systems. Each of them calculates their credit scores differently, though both aim at the same goal of assessing the risk of loaning money to a particular person.8 In all of these systems, however, this remains true: Higher credit scores indicate greater creditworthiness.
Frequently Asked Questions
Changes in your credit limit are reflected on your credit report and can change your credit score. For example, an increase in your credit limit would result in an improved score if your spending doesn’t change because you would be using less of your available credit and therefore have an improved credit utilization ratio.8 However, if you increased your spending to match that higher limit, the proportions wouldn’t change and, likely, neither would your credit score.
Applying for a new credit card may increase your credit limit as well, but that also typically triggers a “hard inquiry” into your credit history and can lower your credit score a few points in the short term.
No. They’re two separate and distinct items, even though they’re connected because the information on your credit report generates your credit score.
The Takeaway
A credit report shows your history of borrowing and repaying money to lenders, and its data is used to generate your credit score. The higher your credit score, the more creditworthy you appear to lenders. Your credit limit is simply the maximum amount a credit card issuer is willing to lend you before you start repaying your outstanding balance. It’s a good idea to check your credit report regularly for potential errors that may negatively impact your credit score.
1 “What is a credit report?,” Consumer Financial Protection Bureau
2 “What Are the Different Credit Score Ranges?,” Experian
3 “What is a Credit Bureau?,” Equifax
4 “Chapter 7 & 13: How long will negative information remain on my credit report?,” myFICO
5 “What is a credit score?,” Consumer Financial Protection Bureau
6 “How Often Is a Credit Report Updated?,” Experian
7 “What Is a Bank Credit Score?,” Experian
8 “What Is a Credit Utilization Rate?,” Experian
Michael Grace is a personal finance and technology freelance writer based on Long Island, N.Y.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
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