A credit profile is a key consumer finance basic and acts as your GPA for life. A solid understanding of your credit profile is crucial for managing your financial health and securing loans at favorable terms.

Lenders look at 5 factors (aka "Cs") of creditworthiness when deciding whether to extend credit. One of those Cs is character, and it is assessed based on credit profile, which is the combination of a consumer's credit report and credit score.

The report contains previous debt accounts and any unpaid expenses sent to collections, and the score is a 3-digit numerical representation of report ranging from 300 to 850.

A credit profile is the combination of a consumer's credit report and credit score. It represents a consumer's character in matters of debt management, also called creditworthiness or default risk.

Formal Definition

Formally, a credit profile is a combination of credit report and credit score that provides an estimation of individual borrower default risk based on previous lending and expense management activity. it is the combination of the two and their careful examination that leads to true results.

3 Credit Bureaus & 3 Reports

There are three major credit bureaus, called TransUnion, Experian, and Equifax. Each of these institutions collects information from banks, credit unions, and credit card companies and compiles them into credit reports.

Each bureau may receive different information from creditors, leading to slight variations in your credit reports and scores.

There are only three credit reports — one for each credit bureau. Except for consumers with zero credit history, every individual has a report from Experian, TransUnion, and Equifax.

That said, there are over 40 different credit scores used in the market today. Four of them are VantageScores, and another 39 belong to credit behemoth FICO. Scores fall under 5 categories: general, auto lending, credit cards, mortgages, and new releases.

The most widely-used score is the FICO 8 score. Consumers monitoring their score should focus on this model since it is impractical and arguably impossible to track them all.

Examples

Here is a sample credit report for a fictitious John Doe that includes mention of the three credit scores.

Sample Credit Report for John Doe

Personal Information:

Credit Summary:

Credit Scores:

Account Details:

1. Credit Card - Bank of America

2. Credit Card - Chase

3. Auto Loan - Capital One

4. Mortgage - Wells Fargo

5. Student Loan - Navient

6. Personal Loan - Lending Club

Credit Inquiries:

Derogatory Marks:

Derogatory Marks:

Comments:

Under the third heading are the credit scores for purposes of demonstration, but in a real credit report only the score associated with the issuing bureau is published.

The reader will note that examining all of the information in the report provides a holistic "feeling" for John Doe, whereas a simple 750 credit score leaves room for interpretation, even misinterpretation.

Credit Report vs. Credit Score

The key difference between credit report and score is that the report is a tracking document full of information, whereas the score is a summary analysis of the contents contained in the report.

The score is a measure of credit default for people in similar situations and is therefore relative and not an absolute measure of credit risk.

Credit Report

Credit reports include accounts, and certain details about them. The primary account types are installment and revolving, and secondary types include unpaid bills that go to collections. Additional information includes credit inquiries, which occur when a lender checks the credit report. Bankruptcies also appear on credit reports.

Credit Score

The primary credit score is FICO 8. It ranges from 300 to 850 based on five credit factors. They are payment history, amounts owed, length of credit history, credit mix, and new credit.

Credit Report vs. Credit Score

Credit scores are to their reports what 5-star ratings are to their books. One is the subject and the other is a subjective assessment.

They represent the same information, but one is thorough whereas the other is convenient. The basic difference is that scores are 3-digit numeric (imperfect) representations of the information included on reports.

Reports are lengthy and comprehensive yet inconvenient; whereas scores are brief and incomplete yet convenient.

Because they are a summary, scores are more convenient but less informative than reports. They explain consumer creditworthiness compared to people with similar information, but do not attempt to explain absolute creditworthiness. Score absolutism is a common misconception.

Moreover, FICO has also disclosed that the accuracy of scores is "drifting" further from reality.

Though convenient, scores are subjective in nature like the reports they summarize. Lenders with the capacity to compare and contrast the details contained on reports can arguably obtain a more reliable assessment than relying on the score.

Critics

The primary critique of the credit reporting system is that it focuses on past behavior and ignores current circumstances.

Lenders have the flexibility to examine a potential borrower's current affairs through formal application, but the resources required to do so are only sensible for large debt such as mortgages.

For credit cards and many other forms of low-value lending where approval speed is a competitive advantage, lending rely heavily on credit score and unverified income assessments.

This structure can lead to inaccurate refusals for borrowers who experienced hardship during a time and have since regained stability. Because missed payments remain on reports for up to 10 years and current circumstances do not feed scores, eligible candidates are refused erroneously.