Credit score and credit reports are often mistaken for the same thing but actually, they are not. This is a mistake most people commit and can cost them heavily. Not only are these two different but they are often used for different purposes. Since they are directly related, they can be confused with each other: their purpose and potential effects on your finances.
If you can’t tell the difference between a credit report and credit score, think about your school days. The difference between the two is the same as the difference between report card and grade point average. Both tell the same thing but in different ways: the former tells your performance in numbers and the latter in terms of your grade point. Analyze credit reports and credit scores the same way.
A credit score tells your creditworthiness with a numerical value, while your credit report tells how you repay each of the debt obligations. They are two similar yet different terms. There are two different ways that companies look at and monitor your credit when they consider giving you a loan. The first is your credit score. The next is your credit report or credit history. If you are interested in managing your credit responsibly, you should look both ways. You should do everything that you can to make sure that you have both a good credit report and a good credit score.
Credit Report- Credit report is a transcript that details the past borrowing behaviors of yours that have influenced your credit score. It contains your credit history. Along with that, it contains your personal information like your name, address, and Social Security number, your credit report contains information like the date you created your various credit accounts and took loans, your balances, the total loan amounts, and credit limits on your accounts and your payment history. It also contains information on your tax liens, bankruptcies, etc. Negative dings like late payments and failure in payments can stay up to 7 years in the report. It gives you more insight into the creditworthiness of a person. A credit score is just a number but the report is a proper detail.
Credit Score- In a nutshell, a credit score is a three-digit numerical grade that provides an insight into your creditworthiness to credit card companies, mortgage lenders, lenders, etc. pretty much anyone who wants you to lend you money. Non-lenders like your future landlord might also want to know your financial health. They are ranged from 300-850. Your score shows how fast can you put the borrowed money back in the pocket of your lender. Scores can vary depending on the scoring model since different models put different details as important. It can also vary when different bureaus have slightly different information about you. Thus, a credit score is an algorithm that measures your credit risk based on the information stated in your credit report at one point in time.
Your credit score reflects the information found in your credit report. It might help a lot but cannot replace the credit report because it has its own significance.
The information on both of these is vital and it has many users. Lenders, landlords, insurance providers, utility companies, and even employers might be interested in your credit information. Your credit score can provide a quick summary, while your credit reports go into the details. Different kinds of users need different kinds of information, so they might use your credit report or credit score depending on their needs. Also, to know the reason for the change in your credit score, you can look into the credit report. Thus, it would be fair to say that both are important parameters to just the debt capacity of a person but credit report gives more insight into it.