Whether consumers are new to borrowing or are unclear about some of its rules, credit cards can be a confusing topic for many. Recently, credit scoring company Fair Isaac Corporation (FICO) fielded hundreds of questions from individuals who were puzzled about some credit complexities.
One of the more common queries had to do with what the difference is between a credit report and a credit score. As FICO states, some may view these terms as interchangeable, but they're actually quite different. A credit report details a consumer's history of credit payments. Through a mathematical examination of how well accounts were handled in the past, a credit score provides a statistical assessment of how likely it is that a consumer will default on a loan at some point in the future. The higher the score, the more likely it is that the consumer will continue to handle those accounts well.
Another frequently asked question was whether a score determines if someone will be granted a loan. FICO says yes, but because scores are interpreted differently, what may be a good score to one lender may be too low for another.
If consumers are questioning whether they have bad credit, they may want to meet with a credit attorney. The lawyer may be able to better assess whether a consumer's score is too low and offer a credit solution.