This post is from staff writer Sierra Black. Sierra writes about frugality, sustainable living, and getting her kids to eat kale at

A good friend of mine recently asked me what a credit report is and how he could get his hands on his. My friend has a PhD. He’s a smart guy, and generally savvy about life. If he was asking me this question, he can’t be the only one wondering.

So I called up Ken Lin at Credit Karma to have a chat about credit scores and credit reports.

Credit Reports
Perhaps the first thing you need to know is that a credit score and a credit report are two entirely separate things. Your credit report is the raw data, while your credit score is what a lender makes of that data using one of dozens of credit scoring models. Lin likened this to preparing a meal. The credit report is your raw ingredients, the scoring model is your recipe, and the three digit number you get out as a credit score is the finished dish.

There are three primary credit reporting agencies: Experian , Equifax, and TransUnion. Each of these credit bureaus maintains a separate credit report on you. Any time you see a credit score, it’s based on a report from one of these agencies. There are no combined scores based on data from all three. Lin recommends pulling your credit report from each agency once a year, so you know how your credit is doing. This also gives you a chance to check your credit reports for errors.

To pull your credit report from each of the three credit bureaus, go to This is a government-approved website that will give you free access to your credit report. Credit reports don’t include a credit score. Each of the credit bureaus will try to sell you paid services to get your credit score as well as the credit report. Don’t buy it. You can get that information for free on Credit Karma. I normally avoid endorsing specific sites or services at Get Rich Slowly, but I’ve been using Credit Karma for years, and always had a great experience accessing my credit information when I need it.

Once you have your credit reports, check them carefully for discrepancies or errors. Up to 50% of credit reports have mistakes on them. These can range from simple typos to major problems. If you do find an error, Lin recommends disputing the problem with the bank that reported it, not the credit bureau. Banks report their financial information to credit bureaus every 30 days. That means that even if the credit bureau agrees with you that the information is wrong and fixes it, it will be reported again by the bank and go back on your credit report 30 days later.

“You really need to fix it at the source, which is the bank,” Lin says. “Otherwise you’ll be caught in this endless loop of getting it deleted and having it come back.”

Credit Scores
To extrapolate a credit score from your credit report, lenders use credit scoring models. There are dozens of these, but FICO is by far the most common (with the Vanguard Vantage score in second place). Different scoring models stress different aspects of a borrower’s credit history. One might tell a bank how likely you are to default on your mortgage, for example, while another will model how likely you are to let your credit card payments lapse by 90 days. Depending on what bank you apply for credit with and what kind of loan you want and what model they use, you’ll wind up with a slightly different credit score.

Previously at GRS: Anatomy of a credit score

Since your credit score will change depending on what model is being used to generate (it and what credit report it’s based on), you don’t have one stable credit score, but rather a range of scores depending on these variables. The difference can be as much as 50 points. That’s a wide enough range to push you up or down a bracket in a bank’s interest rate scale, so it’s worth watching.

A good credit score is worth its weight in gold — and then some. Lin told me a person with lousy credit might well pay a million dollars in higher interest rates and fees over the course of his life. That’s a whole lot of wasted cash.

How to Boost Your Credit Score
Your credit score touches every major part of your financial life. Some employers check it as part of a background check on a new employee, to see how responsible you are. Landlords want to see your credit report and credit score to know whether or not you’ll pay your rent on time. A great credit record is a must for any big loan like a mortgage or an auto loan. And your credit score affects the price you’ll pay for auto insurance as well.

A good credit score is anything over 700 points. A score of between 750 and 850 is considered excellent. If your credit’s not already in this range, Lin recommends a few simple steps to get you there.

  1. Apply for one new credit card each year for five years.
  2. Use each card sparingly, maybe to pay for some everyday expense like a tank of gas or a grocery run.
  3. Pay each card off in full each month.

If you follow these steps, this approach costs you nothing, and can help you build a great credit rating in a short period of time. You may also qualify for some rewards programs or cash incentives from the credit card companies. However, if you’ve ever had any trouble with impulse spending or credit card debt, I don’t recommend this course of action. Even the best credit card offers can be a slippery slope for people with a spending mindset.

If your credit is in bad shape, don’t despair. Lin also has suggestions for turning terrible credit around.:

  1. First, get all your bills current.
  2. Next, make a commitment to keep them current. Any time you miss a payment, you start over at zero with the credit bureaus. To improve your credit, you have to be entirely consistent about paying every bill on time.
  3. Finally, establish a secured credit card. This will give you a line of credit that you can use to begin reestablishing a good credit history.

Doing these three things can nudge your credit score up as much as 150 points over the course of a year. Whatever your credit score is, I hope you now have more tools for how to get information about it, how to use it, and how to improve it.