January is a great time to ensure your credit is in good standing. With so much advertising revolving around free credit reports and credit scores, many people get confused on the difference between the two. To help separate these two reports, BBB reminds you that:
- Credit reports are free, credit scores are not. You can visit AnnualCreditReport.com to get a free credit report once every 12 months from the three major credit reporting agencies – Experian, TransUnion and Equifax. The same agencies offer the option to get your credit score for a fee.
- Your credit report lists all your loans and credit cards.It is a complete credit history which includes the amount you borrowed, what kind of loan or credit card you obtained and whether you made payments on time. If information appears to be inaccurate, you can file a dispute with the agency to investigate.
- Your credit score is a number representing your financial risk to lenders. The three digit number is a summary of the information in your credit report. The score takes into account negative marks as well as the types of credit you have and numerous other factors. Higher scores generally allow you to get lower interest rates on future loans. Keep in mind that your credit score can vary from agency to agency depending on what scale they use (FICO, VantageScore, NextGen, CE Score.)
BBB reminds you that the best way to improve your credit score is by making payments on time and reducing your debt. Once these responsible actions appear on your credit report, your credit score will improve.