Credit reports and scores…what is the difference? Despite what most people believe, your credit report does not contain your credit score.
- A credit report is a record that shows how well you have paid your debts.
- A credit score gives a general estimate of your creditworthiness.
While there are many different credit score models, the two most commonly known and used are the FICO Score and VantageScore.
- FICO has a different scoring formula for each of the three Credit Reporting Agencies, based specifically on each agency’s data.
- Scores range from 300 – 850
- Vantage uses one formula for all three of the credit reporting agencies.
- Vantage scores range from 300 – 850 and also assigns a letter grade from A to F.
- Requires at least 6 months of credit history and at least one account reported in the past six months to generate a score.
- Requires one month of history and one account reported within the past 2 years.
- Treats all late payments equally.
- Late mortgage payments are penalized more severely than other types of late payments.
- Multiple hard inquiries for a single type of transaction within a 45 day span will be counted as one inquiry.
- Applies to mortgages, auto and student loans.
- Multiple hard inquiries for a single type of transaction within a 14 day span will be counted as one inquiry.
- Applies to all types of credit.
- Considers all unpaid balances in calculating score.
- A newer version, FICO 8, will ignore all collections under $100, however it is currently not widely used.
- Ignores all paid collections in calculating the score.
26 million Americans are “Credit Invisible”, meaning 1 in 10 adults does not have any credit history with one of the three national credit reporting agencies. An additional 19 million consumers have “unscorable” credit files, which means they either have a “thin file” with insufficient credit history or they have a “stale file” with a lack of recent credit history. Together, the unscorable and credit invisible make up 20% of the US adult population. Click or tap the image to access a Building Credit from Scratch PDF.