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Stop Stressing About Your Credit Score, Read Your Report

Credit scores get all the press in the world of personal finance – quite literally. You constantly hear stories about 800+ scores, or how the scoring system may be changing, or how to improve your score, or what hurts your score or why you should even care about your score…You get it. The credit score is important, but what’s used to generate the score is more important. Your credit report is the foundation of your credit score and ultimately determines if you’re approved or rejected for a line of credit, an apartment, or sometimes even a job.


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Your credit report is used to keep track of your credit behavior. Each time you apply for a line of credit (such as card, auto loan, personal loan, student loan, mortgage), whether or not you’ve paid on time, how long you’ve had each line and whether or not items are in collections will all be stored on your report. It will not include information about your income or net worth.

{Related: The Secret, Magical Math of Credit Scores}

The three credit bureaus (Experian, Equifax and TransUnion) store all this information and use it to generate your credit report. This means you have three different reports, and not all the reports are exactly the same because lenders are not legally required to report your information to all three.

For example, if you have a credit card with Bank A then said bank may only report to Experian and TransUnion but not Equifax.

Credit scoring companies such as FICO® and VantageScore use these reports to generate your score. It’s usually both the credit report and score that are used by a lender to determine if you’d be a reliable borrower.


How to Check Your Credit Report

Under Federal law, you are entitled to a free copy of your credit report from each of the three bureaus once per year. It’s up to you whether you want to check all three at once or spread them out by checking one every few months.

You should really take the government up on this offer in order to ensure all the information being reported about you is factually accurate. It’s not unheard of for inaccurate information to stumble onto your report (especially if you have a common name or you’re a “junior”).

{Related: How Wealth-Minded People Deal With Their Credit}

You may also find the red flags of identity theft if there are open lines of credit or recent inquires for which you never applied or if you find collection items that definitely weren’t from loans, credit cards, medical bills or even utilities that you used.

You can easily check your credit reports by going to It’s completely free and you’ll never be asked to plug in your credit card information.


Common Myths

Now that you know how important your credit report actually is, it’s time to dispel a few myths – myths that are likely preventing you from taking action. Here are a few you can dismiss and why.

MYTH: Checking my credit report hurts my score

FACT: It does not hurt your score when you check your report. It won’t be reported as a credit inquiry and therefore no damage will be done for your score. When a lender pulls your credit report, then yes, it can ding your credit score because it’s a “hard pull” meaning that you’re looking to apply for credit so it gets noted to the lenders.

MYTH: Applying for credit hurts my score

FACT: Okay, this isn’t entirely a myth. It does ding your score a bit, but that ding is usually only a handful of points around 5 to 10, so you can stop panicking about whether or not you can get that new rewards credit card if you are safely in the 700+ credit score range. If your lender does what’s called a “soft pull” when you apply for a loan, then it won’t hurt your credit score. Also, if you’re shopping for a loan such as an auto loan or a mortgage and you do all your shopping around in a 14-day window, then all those inquires will only be weighted as one on your credit score. It’s understood you’re shopping around for the best deal and not trying to obtain 10 different mortgages.

MYTH: Employers can check my credit score

FACT: Employers can check your credit report and even then it’s not the full thing. It’s a truncated version of your credit report and it does not include your credit score. Employers may want to run a credit check if you’re going to be issued a corporate card or dealing with company finances in some way.


Start Caring About Your Credit Report

It makes sense why it’s so easy to be drawn to just focusing on your credit score. It’s a digestible little number instead of scrolling through a report with all your activity. And sure, it’s not a bad idea to keep tabs on your credit score because a significant drop in your score is an indicator that something got reported (factually or not) that you need to go take care of. For instance, you may find out about a collections item by seeing your credit score drop before getting a call from a collector. Just remember, whatever you’re seeing in that three-digit number is based on your credit report, so give it a little TLC and by keeping tabs on it at least once a year.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Erin is the founder of, where she uses sarcasm and humor to explain basic financial concepts to her fellow millennials. Erin lives and works in New York City.
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