Although they’re sometimes used interchangeably, credit reports and credit scores are two distinctly different parts of your credit history. But credit reports and credit scores are similar in that they both carry a lot of weight when it comes to your financial future.

A credit report is a complete review of your financial past, including payment history, total debt, and more. A credit score is a number indicating your financial risk. In short, it’s a score measuring how likely you are to repay debts, such as loans or lines of credit.

Credit reports are prepared by the three national credit bureaus (also called credit reporting agencies)—Equifax, Experian and TransUnion. A single bureau credit report provides the information maintained by one of the three credit bureaus, and a 3-in-1 credit report, the most complete type of credit report, provides a compilation of the financial information maintained by all three credit bureaus.

Credit reports include the following consumer information:

• Payment history
• Length of credit history
• Recent credit activity
• Types of credit used
• Personal information
• Outstanding debt
• Current and previous employers
• Bankruptcies

Most of the information on your credit report comes directly from the institutions with which you’ve done business. By law, credit grantors and lending institutions are permitted to review your credit report to determine whether or not they will grant you credit, and if so, the interest rate they will charge. Therefore, the information on your credit report can make a significant difference in your financial future.

The credit score: A “grade” for your financial responsibility

Credit scores are just as important as credit reports—they provide credit grantors with a quick, numeric summary of your creditworthiness. Credit scores are calculated using the information in your credit report and are generated via computer using any of a number of calculation methods. The basic principle behind a credit score is that your credit past plus your credit present can predict your credit future. In general, the higher your credit score, the more “credit-worthy” you appear to potential lenders.

There are a number of credit models in use, with ranges as broad as 150 to 930. But regardless of the model that is being used, in general the higher your credit score, the more credit-worthy you are. However, the number is not as important as where the credit score falls on the scale being used. Similar to your credit report, your credit score may vary from credit bureau to credit bureau.

Credit scores change as the information on your credit report changes, sometimes as often as once a day. Some consumers get caught up in their credit scores and obsess about what they can do to raise them. Rather than concentrate on the number itself, the best thing you can do is to concentrate on good credit habits, such as paying bills on time and keeping your debt to a minimum. Using smart financial practices, you can grow your credit score over time.

Overall, it is important for you to be familiar with your credit report and credit score before you apply for a loan or other line of credit. Being familiar with your financial history is one of the most important parts of being a responsible, credit-worthy consumer.