K-State Research and Extension News
September 22, 2011
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Credit Report, Score are Not the Same

Financial Management Specialist Gives Tips for Improving Credit Score   


MANHATTAN, Kan. – Financial management experts recommend that you check your credit report once a year at least, and more frequently if you anticipate shopping for a loan or insurance quote. It’s also a good idea to check it immediately if an unusual transaction shows up in a bank, credit card or other financial statement.

A credit report is not the same as a credit score, which is based on a credit report and intended to assess credit risks and reliability, said Carol Young, K-State Research and Extension financial management specialist.

A credit report is a record of your credit history that typically lists identifying information such as your name and address; existing credit; public records, such as any court judgments against you, and any tax lien owed on property. It may also contain information about a criminal conviction, which may stay on your credit report indefinitely, and inquiries about you from potential lenders and other businesses considering solicitations, Young said.

A credit report also will list personal financial service providers, such as the bank at which you have accounts and the type of accounts, credit card limits and balances, school or other loans and money management practices, such as bill paying history, including whether accounts are paid in full, or if only minimum payments are made and balances carried, she said.

A credit report is important because it allows potential lenders, insurers, employers, and others to obtain your information from credit bureaus to assess how you manage your financial responsibilities, said Young, who explained that lenders consider this information in deciding whether to issue a loan, and, if so, at what interest rate.

Insurance companies also may use a credit report to decide whether or not to issue a policy, and, if so, at what rate.

Prospective employers may use the information in weighing your dependability as an employee, and prospective landlords may use the information to assess worthiness as a renter, Young said.

“Accuracy is essential, and that’s why it’s important to check a credit report periodically,” said Young, who advised checking your report at Annual Credit Report -- the only website authorized by law to fill free credit report orders. 


Annual Credit Report.com offers one free credit report every 12 months from each of the nationwide credit bureaus: Equifax, TransUnion or Experian.  The website offers an Internet option, printable form that can be downloaded, completed and mailed, or toll-free number (1-877-322-8228) to request a free credit report from each of three providers.

Imposter sites offering “free credit reports” may require enrollment in a “free” trial subscription that turns into a fee-based service unless you cancel during a trial period, said the financial management specialist, who advised checking other credit report websites to 1) make sure they represent one of the three major credit bureaus, and 2) that the URL is accurate and secure before entering any personal information. 

If you get an email, pop-up ad, or phone call seeking personal information, do not reply or click any link in the message. It’s probably a scam, she said.

With the report in hand, Young advises checking the basics, such as the correct spelling of your name, address, Social Security number, and credit history, which typically includes credit card accounts, car loans, mortgages, and student loans. 

A credit report also may include the terms of your credit, how much you owe your creditors, and your history of making payments, she said.

Errors can vary, said Young, who suggested the example of a credit card that the card holder had closed that is shown as open with credit available.

The error should be reported immediately, as such errors often can be cleared up fairly quickly.  

If a loan payment or payments are in dispute, a customer will likely have to provide copies of proof of payment to correct the error, and that possibility serves as another good reason to maintain an organized recordkeeping system, Young said.

After taking the steps needed to correct an error, she advised asking for a corrected copy of the report.


“A credit report will typically reflect negative financial history for seven years; if a bankruptcy has been filed, it may stay in the records for 10 years,” Young said.

For more information about credit reports and other credit issues, Young recommended checking the consumer information section at the Federal Reserve website.

Why be a stickler for accuracy?

A credit score is derived from the information contained in a credit report, Young said.

Each credit reporting bureau will offer the opportunity to purchase a copy of your credit score, said Young, who advised paying attention to what kind of credit score is being provided. 

While one common credit score is a known as FICO score, agencies and financial service providers may maintain their own in-house scoring systems, she said.  

“In drawing from credit reports to arrive at a credit score, agencies also will use varying formulas,” Young said. And, while consumers are encouraged to seek a free credit report, credit reporting agencies charge a fee for a credit score. The fee is often under $15.   

When paying for the score, be on alert for marketing efforts to push fee-based subscription services that you may not need or want, she said.

Generally, a higher credit score under any credit scoring system will reflect a history of paying bills on time and using credit responsibly. A higher score should help consumers qualify for lower interest rates.

Tips to Improve Credit Report, Score

MANHATTAN, Kan. – It seems we’ve all done it – made a purchase that we later regretted or made some other financial misstep.

Most people make financial mistakes at some point in their lives, so it's wise to assess your financial health periodically and take steps to improve it, said Carol Young, K-State Research and Extension financial management specialist, who recommended:

* Get copies of your credit report and check to make sure the information is accurate.


*Pay all bills on time, by the date due.

* Pay at least the minimum on each account as each bill is received.

* Pay more than the minimum balance if possible, by either setting a larger payment amount to pay monthly, and when one card is paid off,  add this payment to your payment on another credit card or loan; or  2) double the minimum balance amount due to pay down a balance more quickly and reduce interest payments.  

* Stop paying for items with credit cards, and pay down outstanding credit card debt. 

* Charge only what you can reasonably pay off at the end of a billing cycle.

* Aim to have a running balance of no more than 10 percent of the available credit limit; maintaining an outstanding balance of 50 percent of the available credit limit should indicate a ‘red flag’ to adjust your plastic spending habits. Charging one or more credit cards to the limit suggests ‘a poor risk’ and will limit future financial opportunities.

* Beware of credit-repair scams. Sometimes, doing it yourself is the best and cheapest way to repair your credit.

“Five Tips for Improving Your Credit Score” is available in the Consumer Information Section of the Federal Reserve website.

* Reduce debt and increase savings.


* Make choices – prioritize needs, and separate needs from wants or unnecessary extras.

* Build an emergency fund, as a few hundred dollars may be enough to handle small emergencies, such as a new tire or plumbing repair, and eliminate the need to run up a balance – and interest – on a credit card or short-term loan. Fifteen hundred dollars can be enough to handle a medium-sized emergency such as having to travel out-of-state on short notice in the event of a family illness or death. 

“Having some money available in a cash account can reduce the stress in an already stressful situation,” said Young, who advised beginning by saving as little as $5 or $10 a week (to accumulate $260 to $520 a year) and begin developing a financial life-changing habit.

“Setting a goal to save the equivalent of one or more months’ income in an emergency fund is advisable,” said Young, who recommended saving something from every paycheck, transferring money from checking to savings accounts regularly, and taking advantage of job-related retirement saving options. A 401K plan is an example.

* Use an income tax refund, overtime wages or holiday bonuses to jumpstart a larger and more substantial emergency fund. Most financial advisors recommend aiming for three- to six-months income in major emergency savings in the event of job loss, unexpected health care expenses, or major household expenses.

More money management tips are available at K-State Research and Extension offices and online. More information also is available at Credit Reports and Credit Scores.


K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by: Nancy Peterson
K-State Research & Extension News

Carol Young is at cyoung@ksu.edu