How many of us think that “Credit Profile” and “Credit Score” is the same thing?
Well, it isn’t.
There are few similarities but these two terms are different. In this post we shall be explaining these two concepts and the importance it has in our financial life.
What is a credit score?
“Credit score” has been an important term in the last 2-3 years. This 3 digit number can decide your financial future. In general, it is a number that represents how you paid all your bills on time and how much of credit worthiness you have. You can get this score on the basis of what is in your credit report.
What is a credit report?
“Credit report” is like your report card and “Credit Score” just shows your overall rank. In general, this report will list all your credit accounts and show you the overall credit score in it. This report lists all entries which include credit and defaults.
What can you find in a credit score?
Your credit score will be the result of few factors. These factors are;
- Payment History (Bills, EMI)
- Credit Utilization Ratio
- Duration of your credit history
- Credit Mix
- Additional factors
What can you find in a credit report?
In your credit report, you can find the following g entries;
- Current and closed credit accounts
- Your payment history
- Late payments, defaults, written off, settlement
- Credit utilization since the beginning to date.
The usage of “Credit Report” and “Credit Score”?
When you will apply for any type of a loan or a credit card, the Bank/NBFC will check your credit report extensively. This report gives them an idea about your past transactions. They will understand how you treated your old loans and bill payments. By checking your past history, they can determine if you are worthy of being given a loan.
But you also need to understand that these are not just the only parameters that will be checked. They will also check your employment record, income stability etc before offering you a deal.
Ruloans Advice:
You need to ensure that there is no negative entry on your profile. This will directly impact your profile and chances to get a good deal on loans. Ensuring that you pay your bills on time, you will not have any issue. In case you do have any issues related to Credit Cards, you can Click Here and we will be glad to help you.
