Anytime you apply for credit, you will likely hear about your credit report and your credit score, but the two terms are not synonymous. Your credit report is a file kept by each of the major credit reporting agencies – Equifax, TransUnion and Experian – that includes information about where you live, who you owe and how much, how you pay your bills and whether you’ve ever been sued, arrested or filed bankruptcy.
Financial institutions and credit card companies, insurance companies and even employers use these credit reports to evaluate your applications for credit, insurance, employment or even renting a home.
Your credit score is a three-digit number that measures the risk lenders take when they lend you money. Generally, the higher your score, the more you can borrow and the lower the interest rate you’ll pay.
By law, you can get one free copy of your credit report from each agency every year. Just call 1-877-322-8228 or go to www.annualcreditreport.com. Your free credit report will not include your credit score. There is an additional charge for that information.
You can improve your score by paying your bills on time, correcting errors in your credit reports and limiting the number of accounts you open or close in a short period of time.