PGCFCU Blog

It can be tough to understand the differences between credit scores and credit history reports. But, breaking through the confusion will help you to reach your financial goals. Understanding how one influences the other allows you to take meaningful action that can improve your credit.

Misconceptions about what makes up your score and how to improve it continue to circulate online. However, you can break through all the noise. Start by separating fact from fiction. Here are two facts and one piece of fiction related to credit scores and credit history reports to get you started.

Fact: Credit Scores Are a Snapshot of Credit Behavior

Credit activity, including account balances, the timeliness of your payments, and the number of newly opened accounts may be reported to one or more of the major credit reporting bureaus: Equifax, Experian, and TransUnion. Reporting frequency determines how often your credit score might fluctuate. For instance, if you have active credit accounts, then your payment activity and balance information will be updated at least monthly, in most cases. Consumers should contact their creditors to confirm the frequency of reporting to the bureaus. Remember that not all creditors report to each bureau.

Your credit score, commonly generated by either FICO or VantageScore, is a numerical summary of the data in your credit history report. As information is updated in your report, your score can fluctuate. A new credit score is calculated each time a potential creditor requests it.

Fact: Credit History Reports Can Be Disputed

According to the 2018 Consumer Response Annual Report, the Consumer Financial Protection Bureau received over 16,000 complaints against each of the major credit reporting bureaus. The majority of complaints were related to incorrect information appearing in credit history reports. Claims of data belonging to someone else, inaccurate credit accounts, personal data and public record information made up the majority of alleged inaccuracies. Errors happen, but they can be disputed.

Consumers can file a dispute by following the procedures on each agency’s website. There’s no charge to file a claim, but be prepared to provide documentation to support your dispute. Expect to wait about 30 days to receive a response.

Equifax Dispute

Experian Dispute Online

TransUnion Credit Dispute  

Clearing a dispute at one agency does not clear it for all. Review each credit history report and take action as needed based on each one.

Fiction: Credit History Reports Include My Entire Credit History

Your credit history report does not contain a lifetime of credit activity. But, it does record how you’ve managed credit over a significant period of time. For example, credit card misuse in your early 20s might no longer appear on your credit report if you’re now in your mid-30s and the account was closed at age 23. Bad credit won’t haunt you forever.

The Fair Credit Report Act limits the amount of time that negative items are allowed to stay on your credit history report. Generally, negative information remains on each credit history report for seven to ten years:

• Late payments, charge off accounts, collection accounts – 7 years
• Bankruptcy (depending on the type) – 7 to 10 years
• Repossessions, civil claims, foreclosures, short sales – up to 7 years

Positive data, such as when you’ve paid as agreed, may stay on longer according to each credit bureau’s policies. In some cases, positive data may stay on the report for up to 10 years.

Focusing on responsible credit use, beginning with on-time bill payment will have the most significant impact on your ability to establish good credit.

If you’d like to see your credit score rise, then start with your credit history reports. Request a free copy of each one at AnnualCreditReport.com. Dispute any genuine inaccuracies and catch up on any past due accounts. Avoid making late payments and keep account balances low when compared to the credit limit and you will likely see an improvement to your credit score.