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Credit Rating |
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Your credit rating is a type of "report card" that is maintained by credit bureaus or credit reporting agencies as they are commonly called. These credit reporting agencies collect loan balance and payment information from lenders who have agreed to report your financial performance.
Your credit rating reflects how much debt you are carrying and how well or poorly you keep up with you payment obligations. Lenders use the information that makes up your credit rating to determine whether or not they will extend you credit or approve a loan.
In order to make the decision process as easy as possible for lenders, credit reporting agencies use a score known as the FICO Score to determine your credit risk and the likelihood that you will repay your debt.
It has become increasingly more common for employers, insurance companies and landlords to also depend upon your FICO score when making a determination about whether or not they are willing to hire you, issue insurance to you, or rent you a home or apartment. That's why it is so important for you to maintain good credit rating in today's economy where computers make decisions about you without humans even being involved.
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Credit Card Definitions > A - E > Credit Rating
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