You might be clicking on this article in a panic, thinking, “wait a second, there’s a difference between credit reports and credit scores?” Well, I’m here to inform you that there is a difference between the two, but there’s a good reason the two are often mixed up. And depending on how you check, your score could be affected. Let’s take a closer look.
What is a credit report?
For starters, let’s delve into what a credit report actually is. A credit report is a statement that has information about all of your credit history, as well as some identifying personal information. This includes current and past credit situations such as student loans and credit cards accounts as well as your history of paying back loans and using credit responsibly. It also shows more granular data, such as your credit limits, age of accounts, and credit utilization.
Most people have multiple credit reports. Credit reporting agencies (aka credit bureaus) act as a storage facility for any financial data about you that is submitted to them by student loan lenders, credit card companies, and other lenders. Creditors aren’t required to report to every credit reporting agency. They can sometimes only report to one or two, leading to discrepancies when you check your credit report on different credit platforms.
Lenders use credit reports to help them determine if they should loan you money. They also use credit reports to determine your interest rates and other terms of your loan. People and businesses can also use your credit report to determine if they should rent an apartment to you, provide you with insurance, or offer you utilities like phone service or internet. Some employers will even ask to look at credit reports and use them to make their employment decisions.
When lenders and other businesses want to see your credit report, there are two ways they can conduct a credit check: a hard credit check or a soft credit check. A hard check can affect your score, but a soft check won’t hurt at all.
Hard check vs. soft check
There are two types of credit checks, there are “hard checks” and “soft checks.” The difference between the two credit inquiries has to do with how they affect your credit score and how “official” they are.
Hard credit check
Hard credit checks will show up on your credit report and require your full social security number. They are usually conducted when you apply for some of the following:
Soft credit check
Soft credit checks won’t be shown on your credit report. These checks have no impact on your score and usually only require the last four digits of your social security number. Examples of soft credit checks are:
Personal credit checks
Pre-approved credit offers
Account reviews by current creditors
What is the difference between the two?
Credit reports and credit scores can easily get confused with each other so don’t be worried if you get them mixed up. To make it simple, a credit report is a statement that has information about any credit activity. This includes the status of your credit accounts and loan history. Your credit score is calculated based on the information from your credit report. Check out our article that takes an even deeper dive into what a credit score is.
Will checking my credit report hurt my credit score?
Now that we have clarified what credit score and what a credit report is we can finally answer the big question. Checking your credit report yourself will not hurt your credit score, and you should take advantage of this. You can get a free credit report every 12 months from each of the 3 major reporting agencies (Equifax, Experian, and TransUnion). I recommend requesting your reports separately throughout the year so that you can monitor your credit report throughout the year.
You can also check your own credit on your bank’s app, on the Fizz app, or through a site like Credit Karma. Each of these options does a soft check of your credit, which won’t hurt your score. You can check platforms like these as often as you want.
When someone else, like a landlord or a company, checks your credit by running a hard credit check on you, your score can be affected. But you shouldn’t worry too much. Hard pulls on your credit only stay on your credit report for about two years, and they have a pretty minimal effect - usually around 10 points.
How does this all affect me?
Your credit report plays a significant role in determining whether or not you can rent an apartment with your friends, how high of an interest rate you will have to pay on your loans, and can even be the deciding factor on an employer's decision on whether or not to hire you. This is why you need to be one step ahead of everyone else and know where you are standing on your credit report.
Fizz doesn't do a soft credit check or a hard credit check, so you don’t have to worry about us showing up on your credit report. We just want to help you build your credit score, learn financial responsibility, and take your first steps towards owning your own financial future. That way, when you want to get an apartment with your friends, a low-interest rate on a car loan, or a credit card, you won’t have any problems! Sign up for Fizz today and take a huge step towards financial freedom!
Sam is a Kenyon College alum and is head of content at Fizz. He's been a go to personal finance resource among his peers since getting his first credit card during his sophomore year of college. He hails from Washington, DC, loves all things aviation, and currently lives in Los Angeles.