A credit rating is a score based on a statistical analysis of an individual’s credit file and represents the “creditworthiness” of the person in question.
A credit rating is based on a credit report, sourced from credit bureaus such as Experian and Equifax.
Lending firms, such as credit card companies and banks, use credit ratings to evaluate the possible risk posed by lending money to consumers and to mitifate losses due to bad debt.
Loan companies and banks use credit ratings to determine whether or not the individual qualifies for a loan and the interest rate they would be entitled to.
A credit rating can also be used to help lenders identify which customers are more likely to bring in the most revenue. Using credit scoring before authorising access or granting credit is a widely accepted, trusted system.
If you are struggling to obtain credit it’s certainly worth remembering that there are a various number of options available to you.
It can prove difficult to obtain credit if your score is poor which is why products such as pre-paid cards, payday loans and logbook loans have come about as they do not rely on the customer having a good credit rating.
