You probably already know that your credit report and credit score are important—but why? For a few reasons, but here’s the most important: what’s on your credit report can make or break your applications for loans, credit cards and much more.
To get approved for those lines of credit, you need to understand your credit report. Did you know you have more than one credit report? Which is the most important credit report? If you’re looking for answers, we’ve got them. Keep reading to learn more.
In This Piece:
- How Many Credit Reports Do You Have?
- Credit Scores Versus Credit Reports
- Why Do People Look at Your Credit Report?
- What Is the Most Important Credit Report?
- What Is the Most Important Information On Your Credit Report?
How Many Credit Reports Do You Have?
Everyone has more than one credit report. Each of the three major credit bureaus—Equifax, TransUnion and Experian—has its own credit file for each consumer. Creditors and other businesses aren’t required by law to report to all the bureaus, or even any bureau. So your credit report will vary from bureau to bureau.
The type of report that’s pulled also depends on who requests it. For example, when employers pull your credit report for a background check during the hiring process, they receive a report specifically designed for this purpose. It’s scrubbed of information that id not relevant to your employment requirements. On the other hand, lenders evaluating you for a loan will see a completely different type of report.
Some people have no credit reports. These individuals are referred to as the credit invisible. They don’t have credit reports or credit scores because they don’t have credit history reported to any of the bureaus.
Where Can You See Your Credit Reports?
You can get a free annual credit report from each of the three bureaus at AnnualCreditReport.com. Typically, you can only access your report once a year. But due to the COVID-19 pandemic, the credit bureaus are offering free weekly credit reports for a limited time.
You can also get information about your credit report via our free credit report card. Your report card gives you a grade on each of the factors that impact your credit score, so you know where to improve. And if you want a deeper look at all three of your credit reports, you can sign up for ExtraCredit®.
Credit Scores Versus Credit Reports
You might think that you’ll see your credit score on your free credit report. But credit scores and reports aren’t the same, and AnnualCreditReport.com doesn’t provide a credit score.
A credit report is a document—digital or hard copy—that details the information a specific credit bureau has on file for you. On the other hand, a credit score is a three-digit number that rates your creditworthiness based on information in your credit report.
How Many Credit Scores Do You Have?
Because your credit reports are different from bureau to bureau, your credit scores will be, too. You can have more than two dozen FICO scores, for example. And FICO isn’t the only scoring entity; many creditors also use VantageScore.
Each credit scoring model has a similar approach to rating creditworthiness. However, each puts slightly more importance on different factors or considers information the others may not. So your actual score with each of the models can be different.
Where Can You See Your Credit Scores?
You can get one of your credit scores based on Experian data when you sign up for the free credit report card at Credit.com. And paid subscribers to ExtraCredit can see up to 28 of their FICO scores to get a clear picture of their credit.
Why Do People Look at Your Credit Report?
Your credit report and/or scores can be pulled for a variety of reasons. Here are some of the most common reasons someone might look at your credit:
- To evaluate you for credit. Most lenders pull your credit report and score to determine whether they want to lend you money and what rates and terms they can offer. Your credit score and history help lenders understand how risky a borrower you might be. Lenders need your permission to pull credit for this reason, and it goes on your report as a hard inquiry.
- As a background check for employment. Some employers may pull your credit as part of a background check during the hiring process. They need your permission to do so, and the pull shows up as a soft inquiry on your report.
- To offer you service. Auto insurance companies and even utility agencies may pull your credit before setting up services. Credit history could impact premium costs or whether you have to put up a security deposit. These are typically considered soft inquiries.
- In a rental background check. Landlords may pull your credit when considering you as a potential tenant—and they need your permission.
- To check your information. You may pull your credit reports yourself to check whether the information on them is accurate. If it isn’t, you can dispute it. These are considered soft inquiries and shouldn’t impact your credit score.
- To prepare a preapproval offer. Companies can do a soft pull on credit reports before sending a preapproval offer for credit. If you’ve ever received a “You’re preapproved!” offer from a credit card company, this may have happened. Companies don’t need your permission for these types of soft inquiries, but you can opt out of them.
What Is the Most Important Credit Report?
The most important credit report is the one that’s most accurate and up-to-date. That gives you the best indication of your credit history and credit score.
Which Credit Bureau Is the Most Important?
No credit bureau is better than the others. However, lenders, landlords and others may not check all three credit reports when evaluating you as a potential borrower or tenant. In those cases, the most important credit bureau is the one they’re pulling information from. Since you can’t predict which one a business will choose, it’s important to ensure the information is accurate on all your reports.
What Is the Most Important Information on Your Credit Report?
The most important information on your credit report with regard to your credit scores tends to be the newest information. A lot of information stays on your credit report for around seven years, but it loses impact on your score over time.
With that said, there are five factors that impact your credit score:
- Payment history: The record of the bills you’ve paid—and if you’ve paid them on time or not.
- Credit utilization: How much of your available credit you’re using. Experts recommend keeping your credit utilization ratio 30% or lower.
- Credit age: The overall age of your credit history, as well as the average age of open accounts.
- Credit mix: Whether you have a good range of credit accounts, like revolving or installment accounts.
- Inquiries: How many hard inquiries are on your report.
What Do You Do If Your Credit Reports Aren’t Right?
When it comes to credit reports, the most important thing you can do is make sure all your information is accurate. If you need help disputing information on your credit reports, you don’t have to do it alone. Consider checking out the credit repair services from Lexington Law Firm to get started.
You Might Also Like
June 14, 2023
January 25, 2022