Credit Score vs Credit Report: Know the difference for financial success
Credit scores and credit reports are among the most widely discussed subjects in the realm of finance and banking. Whenever you use a payment app or visit a bank or fintech’s website, they suggest checking your credit score and reading your credit report carefully.
So, what are these things, and are they really important? The answer is a definite 'yes'! Your credit score, a three-digit number from 300 to 900, and your complete financial report in your credit report are indeed worth the attention they get.
Your credit score is your creditworthiness. Based on the calculation of your past credit history and financial information, your score gets calculated. The higher your score, the better your creditworthiness is and vice-versa and so does a loan borrower consider you for lending the loan you applied for. A score above 750 is mostly considered a good credit score and is accepted by most financial institutes to move forward with your loan. Your credit score is calculated by the authorized and licensed credit rating agencies and is based on the following five factors:
1. Payment history
2. Credit utilization
3. Length of credit history
4. Credit mix
5. Number of credit accounts recently opened
A credit report or Credit Information Report (CIR) is your detailed summary of credit information which results in your credit score. The information includes the number of credit cards you are using, the number of active loans in your name, overdraft facilities, the number of loans you have applied for, and even your loan repayment behaviour. The report consists of six sections including information regarding your
1. Credit score
2. Personal information like name, age, Permanent Account Number
3. Contact details like address,
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