American households and the national economy are dependent on credit. Americans highly depend on credit to enjoy the best of life and repay the money through their working years. Imagine having that car, house, and any other property today and paying for it over several years.
Rather than just look at you and make a decision or undergo vigorous, expensive, and time-consuming investigations on a borrower’s ability to pay, lenders have opted for the credit score system. The system allows industry players to quickly and efficiently decide whether they will offer you credit. It is cheaper and takes less time to provide lenders with the necessary information.
It’s important to check your credit report at least once a year to guard against identity theft and quickly deal with any incorrect information or improperly reported debts or payments.
What is the Difference Between Credit Score and Credit Report?
Before looking at the difference between the two terms, it’s important to note that they are closely related. For that reason, people tend to look at the two as if they are one and the same thing. However, there are ways in which credit scores and credit reports differ. So, what are credit scores and reports?
- What are Credit Reports?
A credit report is a historical record of a borrower’s ability to settle debts. The report gets the borrower’s details from multiple sources, including credit card companies, banks, microfinance, governments, collection agencies, utility companies and others. Credit reports also show where one lives and works, and indicates whether you have filed for bankruptcy or have been sued. Credit reports then use an algorithm to allocate percentages to these considerations and generate a credit score.
- What is Credit Score?
A credit score is based on an individual’s past performance to repay credit – including credit cards, car loans, personal loans and mortgages – extended to them by a lender. It is an numerical expression created by a close check of an individual’s credit files to show the creditworthiness of that person. Credit scores range from 300 to 850; the higher the score, the better. Credit scores are extracted from credit reports.
- Difference Between Credit a Score and a Credit Report
The main difference between credit reports and credit scores is that a credit report provides summarized data on your borrowing history. A credit score comprises three-digit numbers that instantly represent an individual’s overall credit risk. The credit score figure ranges between 300 and 800 and is acceptable in the industry throughout the United States.
Which is the Best Site for Credit Report and Score?
If you’re looking for a free credit report and score bureau to help you check and monitor your creditworthiness, there are several options available. The three recognized credit bureaus in the United States are Equifax, TransUnion, and Experian. U.S. law entitles Americans to a free credit report annually, meaning you can request a free credit report from each of the three credit bureaus each year.
It is important to note credit reports cover individuals, not businesses, families, or groups. And after you have received your free credit report, you will have to pay to get additional reports until a year has elapsed. The exception to this rule is if you have applied for and been denied credit, after which you may request another free report.
The only official free credit report website is www.annualcreditreport.com, a website operated jointly by the three government-recognized credit bureaus. Many other websites advertise free credit reports, but often you will find hidden fees and charges so it is recommended to stick with the official free credit report site.
If you find mistakes on your credit report, you can file disputes with each credit bureau individually to help remove incorrect information from your credit report and potentially improve your credit score, Each major credit bureau offers online methods to file disputes free.
Credit Repair Services
Low credit scores can result in higher interest rates or even denial of credit entirely. Some employers check credit scores to gauge how responsible an employee is, and low credit scores or unpaid debts on credit reports can affect your ability to get insurance or qualify for a rental home.
If your credit score is low or your credit report shows too many late payments or unpaid debts, it will be difficult to qualify for credit. Credit reports provide contact information for each item listed, so you can reach out to the companies directly to attempt to settle an outstanding debt and clear it from your credit report. Some people choose to use a reputable credit repair service, which can negotiate a payment schedule and help clear negative items from credit reports. It’s prudent to investigate a credit repair company’s track record before signing up for service, as there are some shady companies out there, but there are several top-rated credit repair bureaus which can legitimately help clear negative items from your credit report and increase your credit score.
Need Help Repairing Your Credit?
The Credit Pros is a top-rated credit repair company with thousands of 5-star reviews from satisfied customers. Use this link to get in touch with The Credit Pros to schedule a free, no-obligation consultation to see if they can help you repair your credit and increase your credit score.
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