They all start the same, and sound like they could be similar. But what IS the difference between a credit history, score and report?
In the world of money, terms like “credit score”, “credit report” and “credit history” get bandied about a lot. You’ll likely hear them when applying for credit - from something relatively small like a phone contract to something comparably large like a mortgage. Most of us probably think they’re just different ways of talking about the same thing, but they’re not.
In this article, we explain what each one is, so you can see how they’re different, and how they work together. Let’s start with credit history.
Your credit history is the record of information about you that’s held by the three credit reference agencies in the UK (Experian, TransUnion and Equifax). It contains six years of your financial history, and includes:
- your personal details such as your name, address and date of birth
- your electoral roll history
- publicly held information about any CCJs, IVAs or bankruptcies that have been filed in your name
- details of anyone you’re financially linked to through joint accounts
- information about any credit arrangements you’ve made, for example loans, credit cards, overdrafts or mortgages
- searches of your credit history that have been carried out on you
- notes regarding corrections where mistakes have been found in your history, or you’ve disputed the accuracy of some information
With your credit agreements in particular, your credit history will usually contain records of what type of credit you used, the name of the lender, the amount you borrowed or your credit limit, your balance, your payment history, and the date the account was opened.
If your credit history is a record of your credit agreements over the last six or more years, what’s a credit report? In a nutshell, it’s the way your credit history is delivered to you when you request to see a copy of it.
Your credit report provides a snapshot of your credit history, as it looks in the moment you requested it. Your credit report will contain the most up-to-date information available from credit reference agencies. But, when you see it, you may still think that some of the information is a little bit behind. This is because the lenders you have accounts with usually refresh the information that they share with credit reference agencies once a month. So, it’s normal to see that the credit report you receive today doesn’t yet show that you used your credit card to pay for groceries yesterday.
Checking your credit report regularly can give you a good idea of how your credit history is changing – for better or worse – over time. It can also help you to understand how attractive you are to lenders as a potential borrower. You can view your credit report for free by requesting a copy of your statutory credit report from any of the credit reference agencies, or by joining a service like CredAbility, Ocean’s own way for you to get on-demand access to your Equifax credit report, updated for you every month.
A credit score is a way of summarising the contents of your credit report as a number. It’s an easy way for you to gauge how attractive – or not – you’re likely to be to lenders you apply to. The higher your credit score is, the more choice of different lenders you’re likely to have when you need credit, and the lower the interest rates you’re likely to be offered.
However, there is no such thing as a universal credit score.
What your credit score is depends on who you ask for it, and when you ask them. You may be given a credit score by the credit reference agency you choose to get your credit report from. But, if you then decide to get your credit report from a different credit reference agency, you’ll probably get a different score, out of a different number. There’s no hard and fast way of working out your credit score, and no one credit reference agency’s method is better than the others. But, if you have a good score with one provider, then you should find that whoever else you check your score with, you have a good score with them too according to their systems.
Because universal credit scores don’t exist, we think it’s best to think of your credit score as a way to see if your credit history is in good shape – or not – at a glance. If your score isn’t as good as you expected it to be, then you could use this as a sign to go through the details of your credit report to see what could be holding you back, and if there are any mistakes or errors you need to get fixed.
What do lenders use?
Even knowing the difference between your credit history, credit report, and credit score the question still stands: which of these three do lenders use to decide whether to let you borrow from them? The short answer is all of them… sort of.
When you apply for credit, the lender will usually run a credit check, which involves them getting a copy of your credit report to review. As we now know, your credit report contains information taken from your credit history.
Where it gets a little trickier is with how lenders use your credit score. While lenders do use a credit score for you, it’s not one of the ones you could view yourself that’s worked out by a credit reference agency. Each lender has their own unique acceptance criteria, which they’ll use as a point of reference when reviewing your credit report. They will then use this to work out their own score for you that’s based on what they’re looking for in particular. Because each lender’s criteria and scoring systems are their business secrets, you’ll probably never see exactly the credit score they work out for you.
The bottom line
Even though your credit history, report and score are all slightly different, they are all used together to help you understand how appealing you are as someone to potentially lend money to. If your credit history shows you’ve been a responsible borrower in the past – someone who’s always paid on time, stayed within their limits and kept their use of credit to the minimum necessary – then chances are you’ll have a good credit score, and you’ll be someone lots of lenders are interested in offering credit to.
If you’ve missed payments in the past, have gone over your credit limits, or have taken out a lot of credit that you’re still repaying, then this could mean you struggle to access additional credit, and the lenders who are prepared to help you may charge higher interest rates.
Disclaimer: All information and links are correct at the time of publishing.