The Importance of Credit Rating
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A credit rating is a formal assessment of a corporation, autonomous governments, individuals, conglomerates or even a country. Credit rating is evaluated on the basis of financial transactions carried in the past and assets and liabilities at present. Credit rating allows a lender or a credit granter to evaluate the ability of the borrower top repay a loan.
In case of personal credit rating, the financial statistics of an individual is studied by a credit rating agency. These agencies are called as credit bureaus. They keep a record of the credit history of an individual. Generally, a fee is charged for allocating a credit score. The agency then allots the individual a 3-digit score called the FICO credit score.
Credit rating is very important. You need to manage a healthy credit score, especially if you are planning to borrow a loan or buy a real estate or an automobile. A low credit rating is considered as a sign of a high risk of non-payment of debt.
Credit rating has the power to qualify you for more credit card offers or rule you out for many credit card offers. Moreover, credit ratings are used to ascertain the amount of a utility or leasing a deposit. It is also used to adjust insurance premium. The ratings are also important to substantiate an individual’s eligibility for employment.
