By George Reed on October 24th, 2016
Superficial knowledge of the financial life is risky for your success! If you are a card holder or have debts, you definitely should know the inner life of the loan process. People, who want to prove their creditworthiness, should provide one of two things – credit score or credit rating. Some of the potential borrowers don’t realize the difference between them and reduce their credit score by applying to the wrong report.
If you can’t choose between two things, one of which can become decisive in the approval process, you should check out the thorough analysis of these two important proofs of your creditworthiness. You might as well consider a small business loan if it suits you better.
Of course, it happens that applying for a loan is impossible. In such cases, it’s important to learn how to manage your budget and forget about the professional writing assistance as it may be unaffordable.
Credit Score: Fundamental Moments
As it was said before, credit scores need a number to express the ability to pay off the debt. They are created by three major agencies Experian, Equifax and TransUnion if we are talking about FICO score. There is also Fair Isaac Corporation score, which is less popular. FICO score isn’t universal – each type of loans requires a specific three-digit number. Generally, a good credit score is considered to be the one over 720. Something lower can become a reason for refusal. Scores can be checked out independently or by the third parties. Financial experts don’t recommend applying for the report more than 2 times a year.
Credit Rating: Fundamental Moments
There is no specific and universal scale for credit rating as each single agency uses its own scale. Among the variety of scales, the one that is created by Standard and Poor’s is one of the most popular. It represents the triple-A rating system, which covers double-A, A, triple-B, double-B, B, triple-C, double-C, C, and D for default. If you choose this score, you will have to provide a credit history and active debts. If this system doesn’t meet your requirements, you can apply to Fitch and Moody’s score, which, actually, uses the same conception.
Both of the reports show your creditworthiness and are required when applying for a loan. What is the difference then? The difference is in the form of the report and those, who need it. A credit score is presented in the numeral form by the individuals or physical person. Credit rating requires a written form and words to describe someone’s creditworthiness. Furthermore, it refers to business or government representatives.
So, if you are going to apply for the loan based on a personal basis, you should provide your credit score. Still, it’s crucial to familiarize with the specific terms of each single lender as well as with commonly accepted credit standards, there are peculiarities of the other parties. We hope that you will manage to succeed in the financial process and maintain your impressing credit history!