Credit Score

A credit score is different from a credit report. It is important to understand the distinction between the two before you begin to research your financial standing. While each has necessary data reflective of your credit habits and history, you may need one or the other depending on your situation.

A credit report as we have mentioned in the previous pages is a complete breakdown of your credit history. The items included in this report are: existing accounts such as credit cards, amount of debt currently incurred and your history of payment. Combined this information provides creditors with a general understanding of your background and determines your level of risk.

Credit Score Vs. Credit Report

A credit score such as Fair, Isaac & Company, is based on one number. This number is determined by the evidence shown on your credit report. These numbers are also used as a general way of evaluating the level of risk involved in borrowing money. The fewer problems you have in your credit history, the higher your score.

In the case of mortgage hunters, your FICO score determines the outcome of your loan. With a score of 800 you are likely to qualify for a larger loan as you present less risk to the lender. For those people with a score of 620, you present an element of risk to the lender and may therefore qualify for less money or higher interest rates.