Why Getting Your Credit Report Might Be Better Than Just Getting Your Credit Score

Certain financial goals like buying a house or car are hard to achieve without the help of a loan. In most cases, you’ll need a mortgage to buy a house and a car loan to buy a car. With the right financing option, these financial goals become accessible and affordable. However, in order to access these financial credit products, you generally need good credit, especially if you want it with low-interest rates.

Before you apply for a credit product, it’s best to check your credit. But should you check your credit score or credit report? Which is more important, and what do lenders look for when they do a credit check?

Why Should You Check Your Credit Scores?

A credit score is a three-digit number that ranges between 300 and 900. Depending on where you fall in that range, you’ll either have poor, fair, good, very good or excellent credit. Lenders use your credit scores to determine your likelihood of paying a debt/bill on time. They also use your credit scores to determine what interest rate to charge you.

Generally, individuals with lower credit scores have a harder time qualifying and are often charged higher interest rates. Those with good credit, on the other hand, are able to access credit without any difficulties and are able to take advantage of lower interest rates and more flexible payment options.

That said, credit scores are not the only factor lenders consider when determining your creditworthiness, other factors like income, debt level and job stability are also considered. Just be sure to check your credit scores as it can give you an indication on your chances of getting approved for a new loan.

How To Check Your Credit Scores For Free In Canada?

Why Should You Check Your Credit Report?

A credit report is a comprehensive file that compiles information pertaining to your credit usage. This includes information about your credit card accounts, loans, lines of credit, and mortgages. However, it’s not simply a list of all the credit accounts you currently have open, it includes information about your payment history, credit inquiries, and public records, some dating back as far back as 10 years.

Each of your accounts in your credit report is also given a two-part rating, a letter, which represents what type of account it is and a number that represents the standing the account is in.

Checking your credit report is important for a number of reasons such as:

It affects your credit scores – The information in your credit report is used to calculate your credit scores. As such, it’s important to review your report and ensure all the information is accurate and up-to-date.
Catch signs of identity theft – If you notice an account or inquiry that you didn’t make, then that could be a sign of identity theft. Call your bank and credit bureau immediately to notify them of the possibility of identity theft.
Dispute Errors – If you notice any errors on your credit report, it could be negatively affecting your credit. By checking your report, you can identify these errors and have them disputed and rectified.

Is Getting Your Credit Report Better Than Getting Your Credit Score?

Credit Score	Credit Report
A 3-digit number between 300 – 900.	A detailed report on your credit accounts and activity.
Represents your likelihood to repay debt/bills on time.	Breaks down your credit usage into categories: credit inquiries, payment statuses, account statuses and public records.
Calculated using the information in your credit report. The five most common factors used are your payment history, debt-to-income ratio, credit history, credit inquiries and public records.	Created by credit bureaus who receive your credit information from lenders, creditors and other organizations.

Your credit scores can often be more important as banks and lenders will use it to determine your creditworthiness. However, checking your credit report is just as important, because the credit score you see may not be accurate due to errors in your credit report. By checking your report, you can ensure that the score you’re seeing is representing you accurately.

If you want to apply for a mortgage or a loan or a line of credit from your bank then you should probably know what’s going on with your credit score. Furthermore, if you’re looking to build your credit or improve it, then you definitely need to know what you’re working with and how much effort you’re going to need to put in to get your credit score to whatever level you desire.

Additional Reading

Credit Reports And Credit Scores FAQs

Are credit reports and credit scores the same thing?

No, credit scores and credit reports are two different things. A credit report is a file that includes all your credit information and activity. This includes things like your payment history, credit account opening and closing dates and credit account statuses. A credit score, on the other hand, is a 3-digit number between 300 – 900 that is calculated using the information in your credit report.

What’s more important, your credit score or credit history?

Your credit scores are calculated based on your credit report information which includes your payment history. So your payment history, in a way, is more important than your credit score as it is one of the most important factors when calculating your credit scores. While lenders often use your credit score to determine your creditworthiness, it’s important to have a good payment history as it often carries the most weight in your credit score calculations.

How many times can you check your credit score without hurting your credit?

Whether you check your credit score every day, once a week, once a month or once a year, it has no impact on your credit. Checking your own credit score is considered a soft inquiry, so it has no impact on your credit.

Does checking my credit report hurt my credit?

Just like your credit score, requesting a copy of your credit report online or by mail has no impact on your credit. When you pull your own credit report, it’s considered a soft credit inquiry so there’s no negative impact on your credit.

Bottom Line

Both credit scores and credit reports are financial tools that all consumers should be aware of and use to their advantage. When you need to access different financial products, both your report and score can affect your ability to qualify. Be sure to check both your credit report and score to understand how you stand as a borrower and if there are any errors in your credit report that are affecting your credit score.

Caitlin Wood

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.