Free credit reports
Free credit reports are provided to all consumers as per the FACT act. Though there are many who are not aware of the same. This report can be availed through any of the three crediting bureaus in U.S which are Equifax, Experian, and TransUnion. These bureaus calculate the credit reports as per information based on payment history of borrowers, loans taken by them, credit limits used, duration or time taken to repay the loans and various other related factors. These reports are then presented to consumers on an annual basis. All three bureaus prepare different reports and all three can be availed once a year for free.
Free credit scores
Credit scores are computed on the basis of the credit reports. The process involves different kinds of calculations and processing through software. These scores are then analyzed on the range of 300 to 850. FICO scores are one of the most widely used credit scores. Even some of the credit bureaus use FICO scores. Credit scores below 500 are considered to be poor scores while scores above 700 are good scores. These scores are the determining factors for getting loans and mortgages. Lenders use these scores to evaluate the potential of a person to repay the amount.
Differences between free credit reports and free credit scores
Free credit reports are provided by all three credit reporting agencies. This is provided at least once a year to borrowers by all three agencies, separately. The credit reports are the larger document on the basis of which credit scores are calculated. Credit scores may or may not be free. Usually credit scores are charged for separately and are sent along with the credit report. But credit reports are free at least once a year and are chargeable only after that. Free credit reports only contain information like payment history, details of loans and debts and other factors. But credit scores are the calculative results of the same.
Uses of credit reports and credit scores
Both credit reports and credit scores are essential for lenders and consumers. The credit reports include details of payment histories, loans taken, debts repaid and other such details. These are useful for debtors to understand and keep track of their finances. Credit scores are calculated on the basis of credit reports and are the easiest way to evaluate the financial potential of debtors to repay loans. Both credit scores and reports have a vital role in the financial prospects of consumers.