What is a Credit Report and a Credit Score?

Credit reports are basically your debt rap sheet. Any experience you have with borrowing—even if that’s a credit card that you’ve always paid off—is on your credit report. (There are some exceptions: payday lenders, for instance, generally do not report to credit reporting agencies.) Although credit reports were initially invented so that creditors could share information on debtors with each other, they have proven such a good spying device that they are now used by landlords, insurance companies, employers, and law enforcement agencies. You can hardly go anywhere anymore without having a credit check run on you.

Think about that for a second: debt has become so central to our lives that for almost anything you do, your character is judged based on how obedient a debtor you’ve been. That sure gives creditors a lot of leverage over you, doesn’t it?

Credit reports are the main tool many creditors use to determine whether you’re “worthy” of their loans. No, seriously. They call it “creditworthiness”.

The more information creditors have about you, the better they can predict what it will be like to lend to you. Creditors, as you might expect, prefer to give loans to people who are more likely to repay. So if you have a record of repaying loans, you will find it easier to get a loan at low interest rates (since the more creditors willing to give you a loan, the less any of them will be able to charge you without being underbid by another creditor). Generally creditors use an algorithm that generates a credit score, which is basically a sophisticated ranking of how likely you are to repay.

But creditors can go a step further than that. Even more than they like having you repay, creditors like when you overpay. With enough information, they can figure out which debtors will be “revolvers”—people who reliably pay only the minimum amount on their loans, thus ultimately paying more because of interest accumulation. They can then target different loan types, with more predatory terms, to people who are already struggling. When those people get targeted for more predatory loans, they begin struggling even more. When they can’t keep up with payments, then they get bad credit reports and can only get expensive loans (or no loans at all). They are discarded as no longer useful. Then they struggle to get jobs, housing, and affordable insurance. Isn’t this a lovely system we have?

Credit Reports

Credit reports are maintained by the “Big Three” credit reporting agencies (CRAs), Transunion, Experian, and Equifax. Most people have a credit report with each of these agencies. You have no say as to whether they can have a credit report on you or not. These agencies do not always have consistent—or accurate—information. When checking your credit reports, it is important to check all three.

CRAs are for-profit companies. They make their money selling information to creditors, so they really only care about making creditors happy. The Fair Credit Reporting Act (FCRA) gives you some rights, but generally CRAs do not care about you except as a source of information they can use to make money off of. They will make you insist on your rights.

Credit reports contain the following information about you:

• Personal identification information (name, social security number, birthdate, past and present contact information)
• Loans and credit accounts (“trade lines”) you have had open over the past seven years
• Payment history, current repayment status and credit limit on those accounts
• List of creditors and others who have requested to see your credit report (“inquiries”)
• Public records from the past ten years: court judgments, bankruptcies, foreclosure actions, etc.
• Sometimes employment history
• Comments from you clarifying information on the credit report

Generally payday loans, rent payments, and utility payments are not on credit reports.

Credit Scores

Credit scores take the information on your credit report, run it through an algorithm, and spit out a three-digit number that’s supposed to represent how likely you are to repay debts you take out.

You don’t have just one credit score. Different credit scores are used for different purposes. Any credit scores visible to you on your credit report are for “illustrative purposes”—to give a sense of the range your credit score is in.

Most credit scores are generated by an algorithm developed, owned, and maintained by FICO, a for-profit company. The Big Three CRAs also came together (isn't it nice how they cooperate!) to create their own set of credit scores called VantageScore.

Although it is simple to say that credit scores predict how likely you are to repay, in fact they also promote indebtedness. People who take on no debt generally have no credit scores because they are “unscoreable”. People who take on only a little bit have “thin files” and generally have low scores. Also, your credit score is likely to be higher the more debt you have, even if you’ve occasionally had trouble paying on some of that debt.

Most credit scores range from 300 to 850, with 300 being "least likely" to repay (or whatever else the score is predicting) and 850 being the "most likely". Although thresholds vary, borrowers with credit scores below 640 (sometimes 620, sometimes 660 or 680) are considered “subprime” while borrowers above are considered “prime”. Subprime borrowers are offered worse loan terms than prime borrowers.

You may have heard of the "subprime housing crisis" that crashed the economy? Well, that was caused by extremely unfair loans being pushed on borrowers with low credit scores who did not have the means to pay them.

Some lenders—like credit card companies—divide up debtors into even more refined chunks, offering different terms and rates to each. If you have received credit card offers in the mail, it is because that credit card company has bought your credit score from a CRA (yes, without your permission), decided that you might be easy to make money off of, and offered you a credit card as bait. See more in the CREDIT CARDS section on this page.

Although algorithms vary, the rule of thumb for what goes into credit scores is:

• Payment history (~35%): Whether you’ve paid and paid on time. The more accounts you have with no late or missed payments, the better your score.
• Utilization (~30%): How much of your credit limit you’re using (this only applies to accounts like credit cards that have credit limits). The less you use, the better for your score. That means even if you borrow the same amount, your credit score will be higher if your credit limit is higher.
• Length of credit history (~15%): Longer is treated as better. Included: the oldest account you have, how long since you’ve last used your accounts, average age of accounts.
• Mix of credit (~10%): The more types of credit you have, the better for your score. There are two types of credit for these purposes: “installment loans” (loans for set amounts like mortgages or student loans) and “revolving loans” (products that you can use to borrow continuously such as credit cards, retail cards, or a line of credit from a bank).
• Inquiries (~10%): If many creditors have requested your credit report, it can count against your credit score. Only “hard” inquiries, where creditors are requesting your credit report because you have requested a loan, count for this purpose. You checking your credit is a “soft” inquiry.

You might have already guessed who is likely to have “good credit” and who “bad credit”. Poor people and people facing economic uncertainty tend to have lower credit scores. People of color are disproportionately affected by economic uncertainty and have historically been prevented from accumulating enough wealth to buffer them from the worst impacts of this uncertainty. This is reflected in credit scores. About 42% of Latinx and nearly 50% of Black people in the US have credit scores below 660, compared to around 20% of White people.

How to get a copy of your credit report (and score)

Under the Fair Credit Reporting Act (FCRA), you have a right to one free credit report per year from each of the Big Three CRAs. To comply with this requirement the Big Three CRAs put together annualcreditreport.com (not “freecreditreport.com”—that’s a site run by Experian that could convert your free credit report into a paid service and/or barrage you with offers from credit card companies). You can also mail your request in with this form

You also have a right to an additional copy of your credit report if:

• You are unemployed and will be applying for a job in the next 60 days.
• You receive public assistance.
• You believe there is an inaccuracy on your credit report due to fraud/identity theft.
• You have been denied credit or a job or anything else because of your credit in the past 60 days.

To get your credit report for one of these reasons, you have to contact the CRAs individually: Transunion, Experian, Equifax.

You do not have a right to a free credit score. Remember, you have multiple credit scores, and any that you see might not be the one creditors are relying on.

If you need to see your credit report more than once in a year or you want to see your credit score, but you don’t fit into those categories, you have a couple options.

• You can pay one or more of the CRAs for your credit report or score: transunion.com, experian.com, equifax.com. It’s not that expensive, but we understand if you don’t want to give these spymasters your money.
• Some companies now offer access to your credit report (or at least your credit score) if you sign up with them. Some credit cards come with this feature. Check out this list created by the CFPB. As well, Credit Karma allows you to view a version of your credit score for free so long as you’re willing to let them select advertisements for you.

Disputing your credit report

If you see something on your credit report that isn’t right or that is inconsistent (or you just want to annoy them or you want to get something off your credit report that shouldn’t be in there because you should not have had to take out debt to pay for groceries, for example), you should dispute it with our CREDIT REPORT DISPUTE TOOL.

You have a right to have inaccuracies corrected under the Fair Credit Reporting Act (FCRA). But CRAs don’t want to spend the time correcting things they're supposed to and they see creditors as their customers, so they are unlikely to make it easy for you. Our tool will help you take them on, but you can also rely on the support of other debtors and allies in fighting and winning your disputes.

Sometimes even after you’ve had something corrected or taken off your credit report, it will go back to being incorrect. Make sure to keep checking your credit report and to dispute it again if they put it back on!

You should also report inaccuracies and failures to correct them to the CFPB and/or the FTC (they share with each other).

Watch out for scams!

There are a variety of “credit repair” companies out there who claim to be able to add some points to your credit score or get some trade lines off of your credit report. These are mostly scams. They are charging for things that you could do yourself or with the help of other debtors for free. And often they don’t even do what they say they will.

There is no magic bullet to “repairing” your credit. Don’t let anybody sell you otherwise.