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A credit rating estimates the credit worthiness of an individual, corporation, or even a country. It is an evaluation made by credit bureaus of a borrower’s overall credit history. A credit rating is also known as an evaluation of a potential borrower's ability to repay debt, prepared by a credit bureau at the request of the lender Black's Law Dictionary. Credit ratings are calculated from financial history and current assets and liabilities. Typically, a credit rating tells a lender or investor the probability of the subject being able to pay back a loan. However, in recent years, credit ratings have also been used to adjust insurance premiums, determine employment eligibility, and establish the amount of a utility or leasing deposit. A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates, or the refusal of a loan by the creditor. Personal credit ratingsAn individual's credit score, along with his or her credit report, affects his or her ability to borrow money through financial institutions such as banks. The factors which may influence a person's credit rating are:
In different parts of the world different personal credit rating systems exist. From Wikipedia under the
GNU Free Documentation License How does making early car payments affect my credit rating? Q. I am the co-signer with my mom when we financed a car from Honda. It lasts for 5 years. I am trying to pay it off in 2 or 3 payments within 1 year to avoid having to pay the high 9% interest rate. By doing this, how will it affect my credit rating? Will I have better credit if I pay it off throughout the 5 years? Asked by Dr. Butt, CPA - Sat Oct 4 12:14:47 2008 - - 6 Answers - 0 Comments A. Auto finance is what I do for a living and sorry but I must disagree. Credit scores are 90% based on the last 24-months of history so to help your credit the most you need to pay at least 18-24 months on this loan before you pay it off. There are lots of lenders that will not even look at approving someone if they don't have at lest 18-months of paid as agreed credit history. And by the way 9% is not high. Answered by unknown - Sat Oct 4 14:41:56 2008 How can I get a business credit card despite bad credit rating in Canada? Q. Help! I'm trying to start up a business and all I need is a $10k business credit card. But I have a bad credit rating and so far lenders insist I must have a strong co-signer. But I can't get anyone to do this for me (long story) Any suggestions? In answer to the first responder, it's a self-employed business. I'm the only employee. It's a long story but my personal financial mess is a combination of the high tech collapse (I'm an engineer) that has gone on 6 years, 3.5 years unemployed for myself. Plus, I have a medical condition. I finally made a bold move to get around the medical condition so I can start my own business, now all that is stopping me is a co-signer. I agree, it's not an enviable position but I have no other choice. Is… [cont.] Asked by almcneilcan - Fri Mar 16 16:22:48 2007 - - 1 Answers - 0 Comments A. Actually, it's a short story. No one else wants to stick their neck out (co-signing) to cover your debts after you have shown little ability to handle your own affairs. They will be 100% financially responsible if you default on your debts and they know it. Operating a business is like operating your own financial affairs on steriods. Who in their right mind would start a business on credit card with up to 32% anual interest? That is a very large nut to crack on top of paying for employees,your wages, materials, rent,phone and lights... then look for making a profit too??? Tell me what kind of business you are going into that has a 32% profit after all expenses and I will start one in a heartbeat (as long as it is legal to do so) Maybe… [cont.] Answered by Rx_Mich - Fri Mar 16 16:36:43 2007 Can I boost my credit rating via an additional credit card?
Q. I'm currently holding an additional credit card from my dad. He's the main card holder, and a very good borrower with excellent credit history. I'm wondering whether I can still earn credit rating through this way? Asked by alrightoday - Sat Feb 21 09:38:24 2009 - - 2 Answers - 0 Comments A. Yes, it will help your credit as a joint owner. ... Answered by Colorado Papa - Sat Feb 21 09:43:07 2009 From Yahoo Answer Search: "Credit rating" See also:
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KnowledgePlex - A credit counselor checklist
