Understanding Your Credit Score

What’s the Difference between Credit Score and Credit Report?

What’s a Credit Score?                             

A credit score is a number found on a credit report that determines the capability of a borrower to settle his or her bills on time. It makes a lender confident to provide loans because he is able to see the borrower’s previous records in paying for his debts.

What is a Credit Report?

A Credit Report, on the other hand, is a summary of your history of payments for bills and other financial responsibilities. It is a complete review of a borrower’s past credit. It shows how you are in making payments for your bills and loans. Aside from that, it also includes other important information about the borrower.

Credit Report Consumer Information:

  1. Understanding Your Credit ScorePersonal Identity Details – This contains your name, address, Social Security Number (can be full or partial), date of birth, and even employment details
  2. Current Credit Details – This provides the details of your existing credit, be it credit card accounts, mortgages, and other types of loans that you may have. It can also indicate how long you’ve had those credits, as well as the terms and conditions, as well as the amounts that you’ve already paid.
  3. Public Records – This can state if you’ve already filed for bankruptcy in the past, and whether you have any cases filed against you such as tax liens or court judgments.
  4. Inquiries – It also includes a list of people who requested for a copy of your credit report.

You need to check on your report at least once every year to make sure no information is entered incorrectly. You can take advantage of the annual free credit report given out by the credit bureaus to ensure accuracy on the details provided.

Why are those two terms being interchanged?

The two terms mentioned are both significant parts of your credit history, as they are both important in determining how well your financial standing and future will be. It is necessary to differentiate these two as both are needed for you to understand your place in requesting for credit.

Main Differences and Significance of One Term to Another

Both terms namely credit report and credit score are important as they both signify the credibility of a person in regard to having debts and credit. It makes a creditor willing to provide financial assistance, and it helps a creditor as well determine the terms of the amounts they are going to agree on.

Every year, you can request for a free credit report, but the credit score is not included at all times, and you have to pay for a specific amount so that you can get the score as well as other features included.

It should be noted then that the credit score is found within the credit report, and the credit score summarizes the information found in the credit report that it is stated in. Creditors will check your credit history or credit report by seeing how long you have been having debts and how you fare in settling them. Afterwards, they’ll check your credit score to see if you are generally a high-risk or a low-risk borrower, and will take it from there.