Although the two terms are often thought to be related they are in fact two entirely different parts of a person’s credit history. However they are both very similar in their ways when it comes to the fact of your financial future and how likely you are to be approved for a loan. When it comes to dealing with matters relating to your credit rating and repairing a bad credit rating, then it is essential that you understand the differences between the two.
Your credit report is your financial history, on this such things are included as your payment history including whether you were late making payments or missed them and the total amount of debt that you currently have outstanding. There are different types of credit reports, a single credit report provides information that is given out by one of the three main credit bureaus and a three in one credit report which is the most complete type of report and which takes into account information from all three credit report companies. The majority of the information which exists on your credit report comes from those companies which you have done business with in the past. When you apply for credit again, by law the lender can check this report and either grant you permission by giving you a loan or by turning you down for credit. Depending on how low your rating is some lenders will allow you a loan but then you will have to contend with paying an interest rate that are well above the standard and this means that you cannot take advantage of low rates of interest or interest free loans. With the information being so essential to you being accepted or declined, you should do everything in your power to ensure your rating remains in the high bracket. Once you have got a bad credit rating it can be improved but it does take time to repair a bad credit rating.
On the other hand your credit score is a number which is assigned to you that shows a lender how big a risk you are determined to be when applying for such as a loan, mortgage or credit card. The higher the number then the less of a risk you will be seen and you stand a better chance of being approved and the lower the number the chances of you getting credit are very slim until you take steps to repair your credit score. Your credit score is just as essential when it comes to the difference between you being granted or rejected for credit as this is a quick and easy method for the lender to assess how big a risk you are. Credit scores are generated by a computer based on the factors of your credit report and is based on the fact that your past can predict your future. If you are going to be applying for credit then it is essential that you have a high credit score so it is essential that you are familiar with both your credit score and your credit rating to improve your chances and not have the uphill struggle of repairing your credit rating.
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Although the two terms are often thought to be related they are in fact two entirely different parts of a person’s credit history. However they are both very similar in their ways when it comes to the fact of your financial future and how likely you are to be approved for a loan. When it comes to dealing with matters relating to your credit rating and repairing a bad credit rating, then it is essential that you understand the differences between the two.
