Credit Rating Scale and Chart Explained In Detail
Credit Rating Scale and Chart Explained In Detail
Sep 28, 2010
Find out more about Credit rating scale measurement and how credit score is calculated, learn how the bureau of credit report creation assigns credit score.
Category: Finance
Classroom: Check My Credit Rating Scale & American Consumer Credit Counselling Service





Credit Rating Scale and Chart Explained In Detail

Credit Rating – An overview

A credit score is a measure which is used to determine the repaying ability of a person in terms of statistical value. When a borrower obtains loan funds or takes on credit, the lender sends the borrower’s detailed information furnished by him to the credit bureau for credit report creation.

Also, if a person is interested in maintaining his or her credit score, has to first ascertain the credit score. It is always beneficiary to be pro-active about the credit score impact while getting financial aid.

The credit score rating system analyzes the debt managing capacity of the borrower and sends the credit report to the lender. This service will be rendered by the credit bureau for free of cost use various evaluating techniques to determine the credit score of a person which is based upon several factors. The important factors which affect the individual’s credit rating are mentioned below

· The person’s credit repayment history

· Debt owed by the person currently

· Length of the credit history

· Frequency of new credits owed by the person

· Type of credit mix

In common, most of the lenders, banking institutions are constantly in contact with the credit bureaus.

Importance of Credit Rating Scale

When people apply for mortgage or credit card, the lender always verifies the borrower’s credit rating score. The credit score report enables the lender to understand their credit worthiness and based on the report the bank will issue debit cards or credit cards, and the borrower can purchase anything through check payment in stores. The risk imposed on the lender by lending money to a borrower can be easily analyzed based on their credit score rating.

When the borrower possesses a good credit report, it shows that he or she makes monthly repayment of debt on time. When the borrower possesses a poor credit report, it shows that he or she is considered to be a defaulter in making payments. Hence, lenders charge a higher rate of interest from the borrowers with poor credit rating due to the risk involved in it. In addition, more than thousands of dollars can be saved if a borrower maintains a good credit rating score instead of paying it off as interest charges.

Importance of Credit Rating Chart

The Credit Rating Chart mentioned below is mainly used to determine the creditability of a person. The credit rating chart ranges from 850 to 500 to determine the creditability of the borrower.

· 760 - 849 excellent score

· 700 - 759 Great score

· 660 - 699 Good score

· 620 - 659 Fair score

· 580 - 619 Poor score

· 500 - 579 Very Poor score


Resources

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Mike Weber
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