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Difference between Credit Report and Credit Score

We all understand that your individual credit score is an important factor in deciding how much and how frequently you will be able to avail credit in the country. Be it a business start-up or personal requirement, no form of credit in India passes onto the applicant without being scrutinised under the light of the credit report and credit score.

Although, credit score and credit report are words that are frequently used interchangeably, in reality they are quite different and how they play a decisive role in establishing your credit worthiness throughout your life. Read on to understand both in detail.

Understanding Credit Score

Credit Score

Your credit score is a 3-digit number that encapsulates your creditworthiness. This capsule is referred to by banks, financial institutes and other lenders when you apply for a line of credit with them.

Why is Credit Score Important?

Whenever you are an applicant for credit, or a subject to mortgage your credit score is scanned. In some cases, your score may even be accessed by communication providers of property owners before renting property to you. Credit reports make it feasible for financial institutes to issue loans.

Understand Credit Report

Credit Report

While your credit score is expressed as a number, your credit report is more like a transcript that contains details of past borrowing patterns that have been recorded on your credit. The composition of the credit report:

Besides basic details such as your:

  • Name
  • Address
  • PAN Details

The credit report has details on things such as the:

  • Date of initiation of accounts and loans.
  • Remaining balance.
  • Total loan amount.
  • Credit limits on the loan account.
  • Payment History.

Public-record data such as:

  • Bankruptcies or tax liens.
  • Negatives such as late payments.
  • Account of collection.
  • All this will remain on the credit report for up to 7 years.

Free Reports Annually: Every 12 months, you’re entitled to one free copy of your report from each of the three major credit bureaus—Equifax, Experian and TransUnion CIBIL.

Variations in The Reports: Equifax, Experian and TransUnion CIBIL operate independent of each other. This way the reports may show up some small.

Composition of the Credit Report

Despite the various formats, most credit agencies carry similar data on you along the following lines:

  • Enterprise Operations: These are credit accounts utilised for trade purposes. Banks scan and report each of these accounts that you hold. The report states the nature of account, opening date, credit limit, account balance and history of payment so far.
  • Inquiries: Every time you apply for credit, you allow your lending body i.e. bank to take a copy of your credit report. These inquiries done by the bank stay on the report in a separate section that contains a record of all lenders that have been through your report in the past 24 months.

How is credit report and credit score connected?

The relation of a good credit score is inverse to the credit risk that you pose on fresh credit that you are seeking. This means that your credit report contains your complete credit history and your credit score is a total of the same and behaves as a capsule of your credit history.

Every time you apply for a credit line, it is quite likely that the lender will have a look at your credit score. Using this credit score, they will determine the credit risk that you pose to them. The higher you score on a scale of 900, the better are your chances of credit approval on the application. Often lenders maintain pre-decided standards on credit issues. For instance, if your credit score reflects in a given range, the financial body will disburse credit at more convenient interest rates or even raise the credit limits.

How to access credit report and credit score?

You can scrutinise your credit report and score using any of these 9 credit reporting agencies that function in India. You may apply for the report by going to the website of the credit reporting agency in question and go through the instructions on filling up the online request form and affixing it.

The Biggest Differences Between Them

Credit ReportCredit Score
WhatThe record of a consumer’s credit history and serves as credit references.It a calculated algorithm that measures your credit risk based on the data in your credit report at a given moment.
WhoThe three national credit reporting bureaus: Experian, Equifax and TransUnion CIBIL.FICO, VantageScore and banks are allowed to create their own proprietary credit scores.
Can It Exist AloneThe credit report is a sole document.The credit score is a calculation.
CreditworthinessCredit report gives the detailed history of an individual’s present and past credit, debt and third-party finances. It also contains various public records and report requests by financial institutes and banks. It includes various dates that reflect account openings, loan amounts, balances, payment history.Most commonly used credit score is FICO. It considers five factors. They are: - Payment History (35 %); - Unpaid Amounts (30 %); - Length of Credit history (15 %) - New Credit (10 %) - Mix of Credit (10 %).
How to CheckConsumers can get a free copy of their credit reports once every year from any credit bureau. It is compulsory for mortgage lenders to display to consumers 3 credit scores gathered for application of credit.

FAQs on Difference between Credit Report and Credit Score

What is a Good Credit Score?

The credit score ranges from 750 to 900. Folks who have a score of 750 plus, are seen as positive by most lending bodies. For people who score less than 750, lending institutes feel there is a risk involved in lending. India has six RBI approved credit bureaus viz. CARE, CRISIL, FITCH India, ICRA, Brickwork Ratings and SMERA. One may decide on getting a credit score online from a bureau’s online portal. One may just as well go for the reputed credit management companies that aid in understanding your credit health.

How is my credit score calculated?

The calculation on your credit score is done along various factors such as history of payment. The repayment record comprises around 35% weightage when calculating the credit score. Besides, your credit score calculation also comes from:

  • Total credit available.
  • Balance of secured and unsecured credits.
  • Total loans and credit cards with you.
  • Credit Use. After this, a scoring algorithm is brought in to help credit bureaus calculate your score. This score goes all the way to help lenders understand your credit eligibility. Besides, it allows them to understand your worthiness for availing credit. The better your credit score, the higher the probability of you getting a loan approval.

How to check CIBIL Score Online?

  • Fill-up the application form on www.CIBIL.com
  • Put in your details such as name, address and contact details.
  • Deposit a nominal fee to receive CIBIL TransUnion score and Credit Information Report.
  • Assess CIBIL score and report you receive.

To receive the physical copy of CIBIL report correspond with: Tower 2A-2B, 1901-1905, 19th Floor One Indiabulls, Jupiter Mill Compound, Senapati Bapat Marg, Mumbai, Maharashtra 400013

Documents Required to get a physical copy of your CIBIL report:

  1. You need to affix KYC documents that are self-attested.
  2. Proof of Address: A Bank statement, Telephone bill etc.
  3. Proof of Identity: PAN, Aadhaar, Voter’s ID etc.

Once your documents are verified, you will receive your credit information report via mail within a week of KYC verification.