Credit Score or Credit Report, Which Matters More?

Credit score or credit report! Factually, both credit scores and credit reports are contributing factors when a bank or some other lender wants to judge your creditworthiness.

While the two equally matter, they are two different entities and not the same in many ways. The most basic difference is that the credit score is but a number that tells your creditworthiness like your marks do in a Math examination.

On the other hand, credit score acts like a complete report card, where the details of all your financial activities are specified.

The confusion between the two terms is common among the rural people, people living in remote areas and individuals who are about to begin their credit journey.

Read further to understand the terms better and improve your financial health accordingly.

Credit Score

The credit score refers to a three-digit number that is usually between 300 and 900. This number is calculated on the basis of your credit report information, where all financial details are listed.

Here are some important points about credit score:

• Credit score ranges between 300 and 900
• One should maintain a credit score of at least 750, as that's what's considered good
• Having a higher credit score is mark of indication that displays your discipline and sincerity toward financial responsibility.
• High credit scores let you enjoy approvals for loans and/or credit cards, as they show a responsible financial behaviour
• You may also get better interest rates, sometimes even of your choice given your credit score is high enough

A good credit score is a sign that you've been on time when it's been about borrowing and repaying money. The score can be influenced by various factors including your payment history and credit mix that are also covered in your credit report in detail.

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Credit Report

Similar to a financial report card, a credit report contains complete details of your handling of the credit that you would have got as credit cards and loans at various time periods.

These details include the following:

• Information regarding your Credit cards and how they've been used
• Personal details, including your name, PAN card number, date of birth (DOB), address
• Any inquiries made by banks/lending institutions at times when you were applying for credit
• Your history of repayment covering on-time, missed as well as any late payments
• Credit limits along with outstanding balances
• Details related to your loan accounts – both active and closed
• Lastly, any defaults, settlements, and written-off accounts, if any, are also covered

Using these details, your credit score is calculated.

The credit report provides the banks and lending institutions with a complete summary of your credit behavior as well as repayment habits.

Here are some important points on credit reports:

• They comprise of your entire financial details
• The credit report is used to judge your creditworthiness at the time of approving you a credit card or a loan
• It helps decide the interest rates also
• Credit reports are also a sign of your financial responsibility
• Its details are used to calculate the credit score

Credit reports are beneficial for lenders who get to better choose between accepting and rejecting your applications for credit cards and loans.

How Often do your Credit Scores and Reports Change?

Because a credit report is a detailed version of your credit-related activities, any new update will bring a change or addition in the same.

However, depending on the type and quality of the change, the credit score may change, or remain the same.

Who Generates the Credit Reports and Scores?

Both credit reports and scores are generated by credit Bureaus, who make use of scoring models when it's about calculating the credit score specifically. Some of these credit Bureaus can be mentioned as CIBIL (TransUnion), Equifax, Experian, and CRIF High Mark.

Which Matters More?

From all that we've read by now, it should be clear that both credit report and credit score matter, almost equally to banks and lending institutions. Lending you a card or a loan impacts their own working. Defaulters can bring significant losses for those approving loans and credit cards. Hence, they need a responsible, reliable collection of data which clearly shows your financial etiquettes.

While credit score is a number that instantly creates an image and impression in the minds, a credit report, on the other hand, details each and every aspect required to be known and clarified with reasons and particulars like dates.

In fact, because there always are chances of discrepancies or errors in the two, it is important that both are kept forth to make decisions regrading granting loans and credit cards.

Check the credit score and credit report on a regular basis to improve the score and better monitor your credit future.

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