What is the Difference Between Credit Rating and Credit Score?

The main difference between a credit rating and a credit score lies in the entities they represent. A credit rating measures the ability of a business or government to repay its financial obligations, while a credit score measures an individual's (and in some cases, small businesses) creditworthiness. Here are the key differences between the two:

• Entity: Credit ratings are assigned to businesses or governments, while credit scores are assigned to individuals or small businesses.
• Expression: Credit ratings are expressed as letter grades, whereas credit scores are expressed as three-digit numbers, typically ranging from 300 to 850.
• Calculation: Credit ratings are provided by credit rating agencies such as S&P, Moody's, and Fitch. In contrast, credit scores are primarily calculated by FICO (Fair Isaac Corporation) and are influenced by factors such as payment history, credit mix, and recent credit inquiries.
• Usage: Businesses and governments use credit ratings to attract investors, while individuals and small businesses use credit scores to secure loans and credit at favorable terms.

In summary, credit ratings and credit scores both evaluate creditworthiness but differ in the entities they represent and the way they are expressed and calculated.

Comparative Table: Credit Rating vs Credit Score

The main difference between credit ratings and credit scores lies in the entities they measure and the information they assess. Credit ratings are letter grades representing the creditworthiness of businesses or governments, while credit scores are numerical values representing the creditworthiness of individuals or small businesses. Here is a table highlighting the key differences between credit ratings and credit scores:

Credit ratings are provided by credit rating agencies such as S&P, Moody's, and Fitch, while credit scores come primarily from FICO and are determined by credit reporting agencies like Experian, TransUnion, and Equifax.