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The Difference Between A Credit Report And A Credit Score


The Difference Between A Credit Report And A Credit Score

Loan applications, mortgage, and credit card companies often take a look at your credit score or credit report as part of their evaluation. Some companies also run the check before deciding whether or not to hire you. Usually, they check both the credit score and credit report to get a better understanding of who you are financially and the decisions you make. The findings from your credit score and report often determine whether you get approved for the loan, job or mortgage. 

It is imperative to understand that although credit score and credit report are assessed interchangeably, they are not the same thing. There is a difference between a credit score and a credit report and the data they present often backs that up. There are several reasons why some companies would check one and not the other, none of which reflect on the similarity of the two. Your credit score and report help people decide whether or not they would like to do business with you.

What Is A Credit Report?

A credit report is a record of all your credit choices. Any credit you’ve taken out, paid or are still owing is reflected on your credit report. A credit report also has important information on your mortgage, credit card, and loan history. If you happen to have many lines of debt, your credit report displays the exact amounts you owe each creditor. The time frame for each account is also taken into consideration in your credit report and your consistency with payments is recorded. Your credit report also records other information such as:

Credit reports are created by specific agencies who receive your information from creditors and compile it all into one. A credit report usually gives a detailed analysis of your credit for a period dating back to seven to ten years. Credit reports are not just for companies looking to investigate you, you can check your credit report too!

What Is Credit Score?

A credit score is a lot less detailed than a credit report and is summed up by a three-digit number. Credit scores are also provided by credit bureaus or agencies and they can sometimes be referred to as FICO scores. Your credit score is calculated based on;

A credit score or FICO score usually ranges between 300-850. Your credit score number often says a lot about you and it is imperative to understand where you stand with your credit score. For example, credit scores are broken down into: 

The higher your credit score, the higher your chances of being approved for that mortgage, loan or job application! Your credit score starts being recorded from the moment you turn 18, this is one of the reasons why financial literacy is so important.

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