Oftentimes, we as consumers refer to our ‘credit’ when talking about our personal finances. In order to be approved for a loan we need “good credit”, but what does that mean? Credit information comes in two forms: reports and scores; both will tell us our financial standing, but each contains unique information and serves a specific purpose.

A credit report is a summary of an individual’s credit history. These are created and maintained by a credit bureau and contain basic personal information (name, addresses, SSN, employment history); summary of credit history (number and status of past and current credit accounts); detailed account information (payments, defaults, etc.); inquiries (how many times has a consumer requested a credit product); public record information (anything that goes through the courts); and information about how to dispute any discrepancies that appear on the report. Consumers are entitled to one free credit report every year from each bureau and to be most effective, every four months consumers should pull one report from one of the three credit bureaus. In this fashion, consumers can monitor their report throughout the year without having to pay fees to access these reports.

A credit score is a numerical representation of consumer creditworthiness. This is based on a statistical analysis of information from the credit report. The FICO credit score is the industry standard credit score. It can range from 300 to 850, with the “default” score being about 620.


300-499 500-579 580-619 620-679 680-699 700-850
Get Help Terrible Bad Moderate Good Excellent
Subprime Prime

Consumer credit scores change frequently, usually on a monthly basis, and the higher the score, the better interest rates and loan terms consumers will be able to get in the future. Consumers can access their own score as frequently as they wish without a negative impact on the score, but a small fee is required each time it is checked.

Regularly monitoring credit activity through credit reports and scores can lead to more responsible financial behavior. This is a way to easily see what behaviors are improving, the status of open accounts, and areas of focus that can be improved.