| Criterion | Credit Score | Credit Rating |
|---|---|---|
| Definition and form | A credit score is a numeric value, often three digits, calculated from the contents of a consumer report using a statistical model. | A credit rating is usually a letter grade or categorical label, such as AAA or BB, assigned to an entity, debt instrument, or borrower. |
| Typical source | Credit scores are commonly produced by credit reporting companies or scoring model developers, using data supplied by lenders and other furnishers. | Credit ratings are issued by rating agencies, or in some consumer contexts by a lender using its own internal scale. |
| Scale and range | Consumer credit scores follow defined ranges that vary by model, such as a scale from 300 to 850 for some widely used scores. | Ratings use ordered categories that vary by the issuing organization, for example investment-grade and non-investment-grade tiers. |
| Primary audience | Scores are frequently used by lenders, landlords, and insurers to assess consumer credit risk quickly. | Ratings are often used by investors, bondholders, and institutional counterparties to gauge creditworthiness of issuers or securities. |
| Regulatory and industry context | Consumer credit scores are subject to federal law, including the Fair Credit Reporting Act, which governs consumer reporting and disclosure. | Ratings for securities may be shaped by securities regulations and agency methodologies; consumer-facing ratings are less standardized. |
| How the measure is used | A score may inform a decision about approval, pricing, or terms for a consumer credit product. | A rating may inform investment decisions, capital requirements, or contractual terms between institutions. |
| Variability and updates | Scores are typically recalculated when report data changes or when a lender requests a new score. | Ratings are reviewed periodically, and changes follow the rating agency's surveillance process. |
Frequently asked questions
Is a credit score the same as a credit rating?
No. A credit score is a numeric value calculated from consumer report data, while a credit rating is typically a letter or category grade for an issuer, security, or borrower. The two come from different processes and are used by different audiences. They are not interchangeable terms.
Can a person have a credit rating?
Individuals generally receive credit scores rather than formal credit ratings. Some lenders may assign internal letter grades to borrowers, but those are not the same as ratings issued by rating agencies for securities. Consumer-facing measures are usually numeric scores.
Who creates credit ratings?
Credit ratings are commonly issued by rating agencies that evaluate issuers and debt instruments. In consumer contexts, a lender may use its own internal rating scale. The method and scale depend on the organization.
Are credit scores regulated?
Yes. Consumer credit scores are connected to consumer reports, which are governed by federal law such as the Fair Credit Reporting Act. That law provides rights related to access, accuracy, and disputes. Ratings for securities fall under different regulatory frameworks.
Do credit scores and credit ratings use the same data?
Not generally. Credit scores rely on consumer report data, such as payment history and account balances. Credit ratings rely on financial statements, economic conditions, and issuer-specific analysis. The inputs and the output scales differ.