Credit Report Vs Credit Score : What’s the Difference?

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  • A credit report is a detailed collection of information.
  • A credit score is a numerical score given to an individual.
  • A credit report does not show your credit score.
  • Lenders use these for deciding whether to grant credit to the consumer or not.
  • Credit ratings are letter grades used for rating businesses and governments.

What is the Difference between a credit report and a credit score?

One is a detailed collection of information. And the other one is a numerical score.

A credit report is a record of your previous credit transactions. A credit score is evaluated from data available in the credit report.

Credit reports and credit scores are two different things. Both are related to a consumer’s financial history and setbacks. When a consumer is in need of a loan or wants to take a credit lender checks the consumer’s credit report and credit score.

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What Is A Credit Report?

A credit report is the detailed information of your financial history. A credit report deals with your history of loans and credit cards. It shows a comprehensive list of your credit and payment transactions. There are three main credit reporting bureaus Equifax, Experian, and TransUnion. These companies altogether compile the reports.

Credit reports constitute of few major records in it

  • Your total outstanding debts.
  • A financial history of credit transactions and payments.
  • A financial history of savings and opening bank accounts.
  • Timely payment of EMIs, debts, or loans.

Credit reports also constitute information on bankruptcies and repossessions.  Credit reports are updated frequently as lender updates the bureau with your credit usage and lending activities.

Once in a year credit reports should be checked on AnnualCreditReport.com for free. This shows creditworthiness. Credit reports include the past financial history of a customer.

What Is A Credit Score?

A credit score is numerical credit worthiness based on repaying credibility of an individual. It helps money lenders in deciding the returning credibility of a person.

Frequently Asked Questions

How Lender Make A Decision Regarding A Credit Score?

Whether a consumer should be granted a loan, a credit card, insurance policies, rentals, or jobs or not is decided by the lender after looking at the credit score for decision making.

An individual’s personal credit score is built on the basis of their previous credit transactions. These transactions are held with lenders or money lending institutes. Credit bureaus source information and prepare credit reports which result in ascertaining the credit score.

A decent credit score ranges from 300 to 850. It is necessary for maintaining the financial well-being of an individual because the higher the score is, there is less credit risk. Lenders such as credit card companies and banks use these scores to understand the potential risk. Such risks are involved in lending the money to consumers.

The credit report also helps in predicting that how much loss a lender can mitigate due to bad debts.

What Is The Connection Between A Credit Report And A Credit Score?

A credit report and a credit score both show the financial creditworthiness of a person. A credit score is calculated on the basis of information shown on a credit report.

Mostly, the lender takes the help of such reports and scores for understanding the financial history of a consumer. The credit bureau collects the information of an individual. Lenders help in updating the details of the consumer.

Looking for any sort of credit, lenders go through your credit reports and credit score. Credits like credit cards, mortgages, loans, insurance policies, and apartment rental are passed by looking at the good credit score and a good report.

What Is The Difference Between A Credit Score And A Credit Rating?

Credit score and credit ratings are two different expressions of finding creditworthiness. The credit score is used for evaluating the creditworthiness of small businesses or individual customers. Credit rating is used for calculating the creditworthiness of businesses or governments.

The credit score is a numerical value assigned to an individual or small business depending upon their credit report.  A credit rating is a letter grade given to businesses and governments based on their credit report.

A credit score is a three-digit number. It ranges from 300 to 850. Credit rating is a one, two, or three-letter grade assigned to companies. It follows AAA, AA, A, BBB, BB, B, CCC, CC, C, and D series in decreasing order.

A credit score is based upon the credit reports made by mainly three agencies- Equifax, Experian and TransUnion. For credit rating  S&P Global,  Fitch Ratings, and Moody’s are the most popularly used agencies.

Both are used for showing the potentiality of companies and individuals in repaying their debts.

How Long Do Financial Records Remain On Your Credit Report?

  • Generally, information remains in the credit report for up to 7 years.
  • Bankruptcy reports can stay on your credit report for the period between 7 to 10 years. This duration depends on the type of bankruptcy.
  • Closed accounts information which is paid as agreed remains on the credit report for almost 10 years.
  • And hard inquiries stay in the credit report for up to 2 years.

CONCLUSION

Credit scores and credit reports deal with the creditworthiness of an individual or a business. Both are linked with each other. Lenders used credit scores and credit reports for deciding the repayment possibilities of an individual.

A credit report shows the compiled information of individuals transactions. This also provides a detailed representation of their financial condition. The credit score is dependent on the credit report. It is ascertained by calculating the information on a credit report.

Credit score plays an important role in valuing your worth. For raising your credit score it is important to clear all the outstanding debts. Hard inquiries can decrease your credit score. Credit report holds negative records for the long term.

It is important to update your credit report for knowing the actual credit score. Lenders are responsible for the updation of the credit report after a particular interval of time.

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