What Is Credit Rating Or Credit Score? What’s The Difference Between Two?

What Is Credit Rating Or Credit Score

Individuals, going to take loan or credit from any Bank or financial institution must know about the What Is Credit Rating Or Credit Score? In lack of the information of these main factors, you won’t be able to prove your credit worthiness. So let’s know, Credit Score or Credit Rating is a numerical score which represent the worthiness of the borrowers and there are various Factors that can affect your CIBIL Score. In contrast to credit ratings, credit scores are usually expressed in numbers but there is minor difference between in Credit Rating and Credit Score. What’s The Difference Between Two? Let’s know here!!

With the help of credit score, lenders can collect you information on your credit report into one number instead of it, credit rating express the information of borrower in alphabetic order. Both are used to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. The most commonly used credit score is the FICO or Fair Isaac Corporation score which takes information from the three major credit reporting bureaus (Experian, Equifax and TransUnion) and uses it to calculate an individual’s credit score. To collect more differences or other mandatory details, please scroll down this page!!

What is a CIBIL or Credit Score?

CIBIL Score or Credit Score is just like a tool, used by lenders to check the credit worthiness and capacity to repay loans of the borrower. Credit Information Bureau of India Limited calculates the CIBIL score on the basis of entire information of the borrower. Credit score or CIBIL Score is a 3 digit number and it ranges from 300-900. Appliers for the loan and credit having CIBIL score more than 750 seems as a Good CIBIL Score. In case of good CIBIL Score, there will be many lenders who will be willing to lend to you.

What is Credit Rating?

Credit Rating is credit score or CIBIL Score for the individuals.  In addition to a credits core, credit report of your credit and payment behavior is provided by Credit Information Bureau of India Limited. Individuals having low CIBIL score can improve their credit rating or CIBIL score within a few months. If you have a low score, you can either take professional assistance or choose to do it on your own. Through credit rating, borrower’s credit worthiness is expressed in letter grade format.

How To Check CIBIL Score Using Pan Card

What’s The Difference between Two? Get Here!!

Sometimes, credit score and credit rating is used interchangeably but there are some definite considerable differences which are well presented below, so let’s check it!!

Credit Rating Credit Score

A credit rating expresses the creditworthiness of a government.

A credit score determines the creditworthiness of an individual.
A credit rating is expressed in a letter grade format such as Triple-A ratings for those governments or corporations that have a healthy capacity for meeting all financial commitments followed by a double-A, A, Triple-B, Double-B and so on, until D for default. Pluses and minuses can also be added to these ratings. Credit scores are usually expressed in numbers such as Fair Isaac Corporation score or FICO score. These scores are 3 digit numeric representations of an individual’s creditworthiness and range from 300 to 900. The closer the score is to 900; higher is the creditworthiness of that individual.
Credit Ratings for corporate or government borrowers that fall in the lower-letter-grade categories, BB to D, make it more difficult to obtain bank financing, and if obtained, account for a higher rate of interest.

Credit scores have a direct relationship to the interest banks charge, maintaining your credit score proves crucial in the credit process. The higher the credit score, the lower the interest rate or cost of credit.

Why CIBIL Score Is Important?

Note!!!

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