Whenever you want to take a loan or a credit card from a financial institution like bank or NBFC, you will hear them talk about credit report and credit score.
Credit Report vs Credit Score
The difference between Credit Report and Credit Score is that a credit report is a report which shows the past history of all your payments, a credit score is a number that evaluates your credit risk that you’re creditworthy or not for any loan. A credit report also includes all types of bank account and debts, credit score is evaluated through your credit file.
Furthermore, a credit report is the history of all credit activity and current credit. It includes public information from government entities as well as information from private companies.
A credit score is the summary of your credit-worthiness based on the credit report.
|Parameter of Comparison||Credit Report||Credit Score|
|Information Given||History and current status of credit||3-digit score|
|Format of Information||Chronological history||3-digit score|
|Used to obtain credit?||Yes||Yes|
|Information Basis||Based on actual credit history||Based on FICO standard|
|Cost||1 free report from each credit reporting agency||Cost varies by agency|
What is a Credit Report?
A credit report is a statement of your credit history and current credit status. The credit report contains information about your creditors and how well you have paid them.
It shows if you were late with a payment, defaulted on a loan, requested more credit lines or limits, and if you have liens or judgments against you.
The credit report gives detailed information on your credit history including when you first opened lines of credit, when they were closed, and if you paid them on time.
The report also contains your name and any other names you may have used, current and previous addresses, employment history, birthdate, social security number, and phone number. Any of these items that are associated with you will be included in your credit report.
It will also include foreclosures, bankruptcies, and companies that have accessed your credit report. Negative and positive information can be shown on the credit report.
For example, you may have had a loan that you defaulted on 3 years ago but also have a current loan that you are paying according to terms. Changes in the credit report can be a red flag of potential identity theft.
This could be loans or credit cards that have been obtained in the person’s name that they did not authorize. Also, some of the credit inquiries could be an indicator that someone is trying to obtain unauthorized credit.
A free credit report can be obtained once a year from each agency. You can also obtain a free credit report whenever you are denied credit, but this is usually from one agency and not all three.
What is a Credit Score?
A credit score is exactly that, a score of your credit. A credit score is a grade of how well you have handled credit. The scale ranges from 300 to 850 with 300 being equivalent to a credit score grade of F and 850 is equivalent to a credit score grade of A.
The credit score depends on many factors such as length of credit, number of credit accounts, balance on those accounts, and payment history. This score is normally used by companies to grant or deny credit applications.
Changes in the credit score are normal in most cases because as you pay creditors on time, your score should increase and when you do not pay them on time, your score should decrease. However, some changes in the credit score could be indicators of potential identity theft.
For example, if you know that you have been paying your creditors on time and the credit score drops, it would be important to look at your credit report to see what would have caused this drop.
Credit scores historically cost money but there are plenty of places that provide free credit scores if you use their services such as credit card companies, banks, and other online services.
Main Differences Between a Credit Report and a Credit Score
- A credit score is a numerical three-digit number.
- A credit report is a detailed statement of your credit history.
- A credit report lists all names, addresses, and phone numbers associated with the individual.
- A credit report can help to identify someone because there is information contained in the report that is unique to one person, but a credit score can be the same among many individuals.
- A credit report does not depend on the credit score, but the credit score depends on the credit report. A person who does not have a credit report will not have a credit score.
- Changes in both the credit report and credit score could help flag potential identity theft.
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