Having a good  credit score is a must these days. It is difficult to avail a loan in case of poor or bad credit score. But, the question is that how do the lenders come to know that whether you are repaying o time by just looking at the credit score?


Even borrowers do not know the difference between credit score and credit report. But, it is very important to understand this difference.


Credit Score is the number which is derived by using the information in your credit records submitted by all your lenders to the credit bureau. It is a numeric value at a point of time that help lenders to assess the credit risk associated with lending money to you. Higher the credit score means lower the risk of default for the lender. In India, a score between 750 and 900 is treated as good credit score by the lenders. This score is based upon a variety of factors like your repayment history, credit utilization information, details of the loan, etc.


This score keeps changing with time.  If you service your loans on time, then the score improves. Whereas it decreases if you fail to repay the loan in time and spoils your credit profile.  The score does not provide your any other information to the lender.


Credit Report is a document that also includes your credit score. This report shows a wide range of information like name, gender, age, address, the PAN card number that defined you. It also defines the loans you have applied for and the repayment history too. If you have defaulted on any loan, then it is also shown in the report.


It also enlists the number of inquiries that is the number of times lenders have accessed your credit report while assessing your loan request.


A credit report is far informative in comparison with credit score. A credit score just gives a numerical value, whereas a credit report provides more qualitative and quantitative inputs to the lender. It helps lenders to take a wise decision while offering money. Hence, it is of paramount importance that you keep track of your investments and liabilities.



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