You may have heard of these financial terms before. They are one of the most important aspects of business financing. Credit scores and credit reports are interchangeable, from loans to credit cards. Due to this, it can be difficult to tell them apart. And that is why you have to get a good grasp of the available information.
One thing you should know about them is that it determines how likely you are to apply for another loan. While they accomplish the same purpose, scores and reports have different financial uses. Lenders will always look carefully at the credit score and report to see if a borrower can repay debt. Here is a summary of the differences and similarities between the two.
Key Differences and Similarities Between Credit Scores and Credit Reports
What is a Credit Score Exactly?
What is a Credit Score Exactly?
A credit score is a three-digit number of the creditworthiness of a borrower. It typically ranges from 300 to 850. Scores ranging from 501 to 699 are considered good. When it reaches 700 and up, your credit score is considered great. Once it is above 800, you have what is considered excellent credit. It is usually calculated based on five factors, including:
Payment history
Amount owed
Length of credit history
New credit
Type of credit
Credits scores can vary, and it shows in your spending history. Lending companies use the scores to know a borrower’s capability. You may get better interest rates in manageable terms if your credit score is good.
What is the Use of a Credit Report?
The credit report is a comprehensive document containing the summary of all transactions. It is managed by the Credit Information Corporation (CIC) under Republic Act 9510. The report contains your TIN, SSS, place of residence, employer, and more. It is accessed with your own authorization and the financial institution’s authority. For business financing, four accredited companies can use the credit reports. They are:
TransUnion Information Solutions Philippines
CIBI Information, Inc.
CRIF Philippines
Compuscan Philippines Inc.
The document is limited to the loan you applied for. When the transaction is done, it is not used for anything other than the purpose you authorized.
How are They Similar to Each Other?
The similarities stem from the fact that they are used in all loans. Whether for business financing or personal transactions, it is no surprise that new borrowers tend to mix up credit score and credit report.
At first, it will be tricky to tell the difference. You will increasingly see the bigger picture of your transaction history in your credit reports as you continue to get more loans. Ensure that you are responsible for paying back what is owed in the specified period.
Consult Your Loan Terms and Amounts Borrowed With Fundline
A credit score can determine what loan will be offered to you. If you have a higher credit score, you can get better deals depending on it. As a result, you can get the best loan terms available for someone with your repayment capacity.
Fundline offers affordable loans to micro, small and medium enterprises. It also aims to provide a comprehensive understanding of finances so you can pay your debts on time. In addition, Fundline provides and advises loan amounts and terms that are based on your credit score. Get in touch with us via this link: https://www.fundline.com.ph/contact !