Strong Roots

Understand Debt and Credit

Debt is money you owe. Credit is the ability to borrow money or use a service now with an agreement to pay later. Neither one measures your worth, responsibility, or future.

Credit report

A record

It contains information about credit accounts, payment history, balances, and other reported activity.

Credit score

A calculation

It is a number created from report information. Different companies and lenders may use different scoring models.

Four useful facts

You may have reports from more than one credit reporting company.
You may have more than one credit score.
Checking your own credit report does not lower your scores.
Incorrect information can be disputed with the reporting company and the company that supplied it.

Official free-report source

AnnualCreditReport.com

Use the federally authorized website when you decide to request reports. You do not need to request a report to complete this lesson.

Visit official site

Check your understanding

Three quick questions

Choose an answer for each question. This is practice, not a test.

1. Which statement best describes a credit report?

A record of credit activity and account informationA single number that never changesA list of everything a person buys

2. What happens when you request your own credit report?

It does not lower your credit scoresIt automatically lowers every scoreIt opens a new credit account

3. How many credit scores can a person have?

More than one, because companies may use different data or scoring modelsExactly one for lifeNone unless they own a credit card