Credit Score and Credit Report are two different terms but are closely related to each other. A credit score is a three-digit number which is one of the most vital components of a credit report, whereas, a credit report itself is a detailed statement that contains information related to the consumer’s current credit history, such as existing loan(s)’s repayment history and credit card dues, etc. The components of a credit report also include personal and account information, past credit accounts, the amount owed/paid, outstanding balance, details of collateral/security or Days Past Due (DPD), etc.
While applying for a new credit application, an application should check their Credit Score in order to avail of lending benefits from banks and NBFCs. Credit scores can be checked and downloaded for free from all four leading credit bureaus, such as TransUnion CIBIL, Equifax, Experian, and CRIF High Mark once in a year. Also, there are many financial institutions that offer FREE credit scores with monthly updates for a lifetime.
The credit score offered by these credit bureaus ranges between 300-900 and a credit score as close as to 900 is considered good by lenders.
Credit Score Range
Below stated is the credit score ranges that various Banks/NBFCs & credit bureaus consider while evaluating credit applications for loans and credit cards:
|Credit Score Range (300-900)
|No Score/New to Credit
|Very Low credit score
|Low credit score
|Fair credit score
|Good credit score
|Excellent credit score
Credit Score vs Credit Report: Key Differences
As these two terms are closely linked, there is often confusion between the terms credit score and credit report. As they aren’t the same, so what is the difference? To make it simpler let us have a tabular representation of the difference between Credit Score and Credit Report for better understanding.
|It is derived from the credit report and is one of the key components
|Mentions all the necessary details that affect the credit score
|The primary factor in determining credit application approval
|All other components are also considered for loan or credit card approval
|Calculated by using a unique statistical algorithm – Different for all credit bureaus
|Compiled using categories, like personal information, account details, credit inquiries, and details of past or current dues on loans and credit cards
|Statistically generated 3-digit numeric that sums up your creditworthiness. Ranges between (300-900)
|Historical information on the repayment schedules of all loans and credit cards
|A high credit score (closer to 900) improves your chances of approval. A low credit score (below 750) may affect your chances of approval
|A clean credit report leads to a good credit score. The credit history in a credit report depicts that the borrower’s behavior is creditworthy and they have managed their credit products well in the past
Credit score and credit reports are useful tools used by financial institutions to measure the credit risk of an applicant. Your credit information on your credit report, as well as your credit score, are equally important to determine whether your credit application will be accepted or denied. Each credit score calculated and generated by credit bureaus shall vary, as per consumer or applicant because every credit bureau uses a different algorithm to calculate credit scores. Credit scores are mainly calculated based on consumers’ financial data provided by the lending institutions to the credit bureaus on a monthly basis.