Credit Reports and Credit Scores: Basics and Definitions
Anyone who holds a credit card would most probably have heard said terms before. Young adults who’ve just gotten their first credit card, however, might not even have the tiniest inkling. In fact, even those who’ve had credit cards for years might be completely clueless about them. To aid everyone then, here are the basic information you’d have to know about credit reports and credit scores.
Credit Report
Ever wondered what are the criteria for denying and approving new credit card applications, loans, and mortgages? A credit report is a comprehensive detailing of all your credit activities. Every payment, non-payment, transfer of credit balance, etcetera, are presented as black and white in the form of credit reports. In other words, what you dismiss as only a couple of months of non-payment may have been the basis of an important loan which is turned down in the future.
Your comprehensive credit report is filed by specific credit bureaus of your country. It’s suggested that you ask advice from credit experts for details. Credit reports are limited to one country, which means you can’t take your report with you if you change your country of residence.
Credit Score
Credit score is the numerical representation of your credit report. Every action you take affecting your credit has a specific numerical value. There are different methods of scoring your credits depending on the bureau and the country. Most usually though, the higher the credit score, the better the credit rating, the more likely you’ll get that loan or that new credit card.
It’s advisable to request for a copy of your credit report months before you even consider planning on applying for anything which would be directly influenced by your credit report and score. If possible, try to rectify your bad record, if you have one, or maintain your current good standing.
Filed under: credit report, Credit Score
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