Difference between Credit Score and Credit Report

Credit reports and credit scores are not interchangeable. A credit report is a record that contains information on your credit history and present financial situation, such as loan repayment history and credit account status, among other things. Your credit scores are based on the information in your credit report. Your Credit score has a significant impact on the types of loans and credit cards you are eligible for. In order to achieve a high credit score, your credit report provides a detailed overview of your debt management and areas for improvement.

When you apply for a credit line, lenders look at your credit report and score (loan or credit card). At first look, both are readily confused. Simply said, a credit report is a record of your credit history, but a credit score is a numerical grade assigned to it. You’ll learn how to make a distinction between a credit report and a credit score in this post.

Who is in charge of my credit report and score?

Credit bureaus have been assigned with the task of determining your credit score and report. The four credit bureaus in India are CIBIL, Equifax, CRIF High Mark, and Experian. Once a year, an individual is entitled to one free credit score and credit report from each of the credit agencies, however this is contingent on the credit bureau used by your lender. A credit report and credit score can be obtained from any of the four credit bureaus.

Many financial portals will also give you your credit score as well as a comprehensive credit report for free.

What are Credit Reports?

  1. Credit reports include information about a person’s current and previous credit accounts and debts, as well as third-party collections, public data, and credit report requests from lenders. The reports include account opening dates, loan amounts, current balances, and payment history, including late payments or defaults.
  2. Inaccuracies in your credit report can artificially reduce your score, resulting in a higher interest rate and less money in your pocket, therefore it’s vital to check your credit report and correct any issues before applying for a loan.
  3. Unlike your credit score, your credit report includes detailed information on your loan, credit card, and charge card history. The four areas include identification information, credit accounts, credit inquiries, and public records. It will almost surely show up on your credit reports if you are overdue on any of your bills. It also tells the reader how many open accounts there are, how much money is owed on them, and a variety of other facts.

What are Credit Scores?

  1. A credit score is a three-digit number that lenders use to determine whether or not to approve or deny your credit application. A person’s credit score is very important when it comes to getting the best credit and loans. It ranges from 300 to 900 points, with a 750 being considered good and signifying that you are more able to compete for loans and mortgages.
  2. Credit ratings are used by lenders, credit card companies, and other financial institutions to estimate how hazardous a potential borrower is. Collection companies use credit ratings to determine whether a customer is likely to repay a defaulted bill. Some landlords assess a tenant’s financial obligations based on their credit score. Similarly, insurers use credit-based insurance scores to determine the possibility of a potential policyholder submitting a claim.

Final Thoughts

You may focus on creating healthy credit habits now that you know the difference between a credit report and a credit score. If you have a solid credit history, your financial life will be easy. You can borrow money or take out a loan whenever you want!

Your credit score is important, but if you want to dig deeper into your credit and examine your history, you’ll also need your credit reports. Cleaning up your credit reports is the first step toward improving your credit score. You cannot count the benefits of a good credit score. A good credit score opens up opportunities of getting the best credit cards in India. Correct any mistakes and pinpoint the areas where you need to improve (for example, where your highest outstanding debt is).