Many often wonder the difference between credit score and credit report; while one is detailed info of your credit cards and loans, the other is a three-digit ranking given depending on your credit report. Continue reading to know in detail the distinction between your credit reports and credit score.
Your credit score is a crucial parameter that is evaluated by the lender or creditor when you apply for a personal loan or credit card respectively. Such a report gives you a comprehensible picture of your debt improvement and management areas to attain a stellar score. Like credit reports for individual borrowers, there are reports designed for companies, too called commercial CIBIL reports. Based on such reports, lenders evaluate the company’s potential to repay the EMI on time.
Here are a few key distinctions between your credit report and credit score
| Credit report | Credit score |
| Credit report endows you with info on your credit standing in relation to your payment status and history of your credit account, and details about any outstanding debts or loans. | Your credit score is a three-digit number that the lenders use to decide whether to accept your credit application. |
| Your credit report is the report of your credit-linked status. It contains info about your credit standing and various factors that decide your credit score. | The average individual’s credit score is a crucial factor when it is about getting the best loan and credit card. It ranges anywhere between 300 and 900, where 750 is considered an excellent credit score. Having a score of 750 and above means, you have a high chance to avail any form of credit option. |
Who forms your credit score and credit report?
Credit bureaus, namely CIBIL, Experian, Equifax and CRIF Highmark, are entrusted with the task to form your credit report and your credit score. An individual is entitled to 1 free credit score with a credit report in a year from each of the 4 bureaus. You even can even generate your score along with a detailed analysis report free from digital platforms. You can check the CIBIL score easily by PAN card details on such online digital platforms.
Credit bureaus collect as much as financial info about every individual to generate a report about the individual’s creditworthiness. Financial institutions like banks and NBFCs (Non-Banking Financial Companies) cater for them with such info monthly.
Is credit report and credit score co-linked?
Yes. Your credit score is formed depending upon your credit report. Your credit report includes all your financial info like credit cards and loans, your repayment history, payment defaults and late payments, all your important credit applications, and your rejected applications. Credit bureaus run the report through the in-house algorithm to get a credit score. Thus, your credit score is linked directly to your report. An outstanding credit report endows you with a good credit score.
- A credit score of 750 & above is preferable for creditors and lenders when processing your loan application.
- Many lenders provide a distinct rate of interest depending upon your credit score.
- Also, they review your existing credit cards and loans to decide your loan amount eligibility.
Can you check your own credit report and credit score? Will doing so lower your credit score?
As a user of the credit option, you have the right to check your credit report based regularly to keep a thorough track of your credit health. Such credit reports are called soft enquiry checks, and they have zero effect on your score. Reviewing your score periodically helps you in keeping track of your regular debts and managing them. Also, you can identify any misinformation or errors in your report and get them corrected as early as possible.
Who can access your credit report and credit score?
Lenders can fetch your credit report before sanctioning your credit at any time, may it be a credit card or loan. In the loan application form, you give them permission to do so. Your application gets processed based on the credit report. Every time the lender or creditor pulls your report, it gets noted on your credit history. Such checks are called hard enquiries, which have a minor impact on your score. This is the primary reason why the experts recommend you not to place an application for multiple loans in a short time span, as it lowers your credit score significantly.
What is an ideal credit score? How can it impact your loan interest rate?
A credit score of 750 and above is usually considered to be ideal by lenders for approving your credit application instantly. As your score inches closer to the mark of 900, you get better offers on your loan rate, amount, and repayment tenure.
FAQs (Frequently asked questions) on credit score
- Are purchases through credit cards listed on your credit report?
The credit report just includes your bill amount and your repayment history. It does not contain info about the location and on purchasing what product you used the credit card. Such information is mentioned on your credit card statement.
- What is important, credit report or credit score?
Both hold equal weightage to decide your creditworthiness. While few lenders only review your credit score, some choose to go through your report for making the ultimate decision.
- Should you check your credit report or credit score?
It is recommended to check both regularly. It assists you to prevent any identity theft or fraud. Also, ensure to correct such info or errors, if any, in your credit information mentioned on your credit report.
- What is the connection between the credit report and credit score?
A credit report is nothing but a record of your experience of debt handling, and a credit score is a 3-digit number computed from your report that shows relative risk linked with your repayment capacity.
- Will it affect your credit score if you check your score regularly?
When you review your credit score, it is addressed as a soft enquiry, and it has zero impact on your score. Checking your score on a regular basis can assist you to keep a thorough track of your various debts and managing all of them effectively. Also, you can identify and correct any misinformation or error in your credit report as soon as possible.
- Will your credit score be the same with all four bureaus?
Not necessarily. Lenders or creditors do not require to report to all the four credit bureaus, and hence the info available with every bureau can be distinct and hence your score can even be different.
