Understanding the distinction between your credit report and credit score, and how they affect small business loans, is crucial for your business. You might wonder about the difference between a credit report and a credit score. Whether it's for a business loan application, personal use, or general business management, knowing how they differ is essential.
What Is The Difference Between A Credit Report & A Credit Score?
A credit report details your credit history, while a credit score provides a general snapshot of your current credit standing. You can obtain a credit report from any credit bureau, but the main three are Experian, TransUnion, and Equifax. Some lenders may refer to a credit report as your credit history. If asked for your credit history instead of your credit score, use a credit bureau to get an updated credit report.
Understanding Your Credit Report
A credit report contains detailed information about your credit history, including open or closed credit accounts, bank accounts, loans, and payment history. Typically, a credit report includes:
Identifying information
Credit accounts
Credit inquiries
Public records
Credit bureaus must provide you with a free credit report once a year. However, they are not required by law to give you a free credit score.
Understanding Your Credit Score
A credit score gives a general overview of your credit history and is based on credit reports, ranging from 300 to 850. It often includes a graphic indicating if your score is poor, fair, good, or excellent. Lenders heavily rely on credit scores when reviewing loan applications; the higher the score, the better your chances of loan approval. Free credit score sites or services provided by your credit card company can give you an idea of your score, though they may not be the most accurate.
Our article can help you understand your personal credit score, including how it’s calculated, factors that negatively impact it, and its importance. Your business also has a credit score—learn more about it and how to check it.
Credit History VS Credit Score: The Bottom Line
Both your credit report and credit score are vital for your business, potential lenders, and financial health. Credit scores offer a quick view of your overall credit health, while credit reports are better for long-term planning, detailed loan applications, and significant business decisions. They serve different purposes but complement each other. If you have questions, contact the bureau that provided your report or score. Support specialists can help you understand the information.
FAQs
What do I do if there's an error on my credit report?
Report and dispute errors with each credit bureau. Visit their websites to learn how to correct errors. It can take months to fix an error, so regularly check your credit report.
What do I do if I'm a victim of fraud or identity theft?
Submit a fraud alert or security freeze if you suspect fraud or identity theft. Fraud alerts last 90 days and can be extended. Credit freezes are more secure but must be temporarily lifted to view your credit report, often for a fee. Place a security freeze with each credit bureau.
Why is my credit score different with each credit bureau?
Equifax, Experian, and TransUnion have different data, as credit institutions are not required to share information with all three. Hence, credit scores can vary. Treat your credit score as an estimate rather than an exact number.
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