Credit reports and scores are not the same thing. A credit report is a document that includes details on your credit history and current financial situation, such as loan repayment history and credit account status. The information in your credit report determines your credit ratings. The types of loans and credit cards you are eligible for are heavily influenced by your Credit score. Your credit report provides a complete summary of your debt management and opportunities for improvement in order to earn a good credit score.
Lenders examine your credit history and score when you apply for a credit line (loan or credit card).
Both appear to be easily confused at first glance. A credit report, simply said, is a record of your credit history, but a credit score is a numerical grade attached to it. Read on below to know more differences.
Who issues credit reports for users?
The task of determining your credit score and report has been delegated to credit bureaus. CIBIL, Equifax, CRIF High Mark, and Experian are the four credit bureaus in India. An individual is entitled to one free credit score and credit report from each of the credit bureaus once a year, however this is dependent on which credit bureau your lender uses.
What are credit reports and how do you get them?
Credit reports contain details about a person’s current and historical credit accounts and debts, as well as third-party collections, public data, and lender credit report requests. Account opening dates, loan amounts, current balances, and payment history, including late payments or defaults, are all included in the reports. Credit report errors can artificially lower your score, resulting in a higher interest rate and less money in your pocket; consequently, it’s critical to review your credit report and repair any errors before applying for a loan.
Your credit report contains complete information on your repayment history. The four sections of a credit report are personal information, contact details, credit inquiries and other records. If you are past due on any of your expenses, it will almost certainly show up on your credit reports. It also informs the reader of the number of open accounts, the amount owed on them, and a range of other details.
What are credit scores and how do you get them?
A credit score is a three-digit figure used by lenders to decide whether to approve or reject your credit application. It runs from 300 to 900 points, with a score of 750 indicating that you are better capable of competing for loans and mortgages.
Lenders, credit card companies, and other financial institutions use credit ratings to determine how risky a potential borrower is. Credit ratings are used by collection agencies to determine whether a consumer is likely to pay a past-due obligation. Some landlords use a tenant’s credit score to determine their financial obligations. Insurers, too, use credit-based insurance scores to assess the likelihood of a potential policyholder filing a claim.
Now that you understand the difference between a credit report and a credit score, you can concentrate on developing good credit practices. Your financial life will be simple if you have a good credit history. You can take out a loan or borrow money whenever you want!
Your credit score is crucial, but you’ll also need your credit reports if you want to dive deeper into your credit and study your history. A CIBIL score login is necessary to check your credit report. The first step toward improving your credit score is to clean up your credit reports. Correct any errors and identify areas where you may improve (for example, where your highest outstanding debt is)