Hello, Sis! Glad to know you have given me this kind of confidence even if I am still just taking this particular class. What I am going to do is give you the basic factors which usually influence credit rating. The criteria used by credit institutions are usually similar so all you have to do is keep these things in mind. The credit rating evaluates and appraises the credit worthiness of an individual or group. The rating is a calculation derived from the creditors financial history as well as the availability of assets and extent of liabilities which tells a lender or investor the probability of the subject being able to pay back a loan. The following are the basic factors considered by most creditors: 1) previous credit performance, 2) current level of indebtedness, 3) time credit has been in use, 4) types of credit available, and 5) pursuit of new credit.
An individual’s credit worthiness is usually determined through a statistical analysis of the available credit data from various credit bureaus. A common form of analysis is a 3-digit credit score (there are many different methods of credit scoring and some lenders even have their own credit score) such as the FICO (named for Fair Isaac Corporation) credit score which analyzes your entire credit profile. As a numerical summary of your credit rating profile, the credit score enables creditors and lenders to easily assess your credit risk and hence, make a decision about extending a loan or credit card to you. Credit scores range from 300 850 but different credit-based services have their own rating for individuals. Consumers with higher credit scores are considered to be less risky borrowers than those with lower credit scores. Higher credit scores allow you to get lower interest rates on credit cards and loans, lowering the cost of having credit.
The Essay on Calculating Credit Scores
1. The first thing any lender wants to know is whether you’ve paid past credit accounts on time. This is one of the most important factors in a FICO® Score. Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO® Score. In general, a longer credit history will increase your FICO® Score. However, even people who haven’t been ...
However, a poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates and might even be refused of a loan by the credit-based services. Your tactic and stratagem should be to improve or at least maintain a high credit score. Keep a very professional outlook on your personal financial status. You can only do this if you make sure that your finances in order. Know what type of credit you have (credits from financing companies can negatively affect your score); avoid overextending your credit even if credit-based services are offering you delightfully tempting deals; keep your outstanding debt as low as you can since continually extending your credit close to your limit is viewed poorly, and above all; make loan payments on time and for the correct amount. Take into account the fact that credit is not built overnight and it is very hard to rebuild it once you have a bad credit record. Credit rating is very significant and overlooking this fact can be very detrimental to your financial health.
You can visit the following sites to know and check your credit rating: Equifax: http://www.equifax.com/ Experian: http://www.experian.com/ Trans Union: http://www.transunion.com/ Just remember, follow the tips I have laid out to you and I am sure you can improve your creditworthiness in no time. Email me again if you need to know more about this. Good luck! Reference List Crowley, Steve. (1993).
Money for life. New York, NY: Simon & Schuster, Inc. Fowles, Debbie. (2003).
The Essay on Credit Risk In Retail Loan Portfolio With Reference To South Indian Bank
Risk is an integral part of the banking business and the Bank aims at delivering superior value to shareholders by achieving an appropriate trade-off between risk and return. Sound risk management and balancing risk-return trade-off are critical to a Bank’s success. Business and revenue growth have therefore to be weighed in the context of the risks embedded in the Bank’s business strategy. Of the ...
The everything personal finance in your 20s & 30s book. Avon, MA: Adams Media Corporation. Investopedia Staff. (2007).
The importance of your credit rating. Investopedia. Retrieved 26 December 2007 from http://www.investopedia.com/articles/00/091800.asp .
Weintraub, Elizabeth.(n.d.) What kind of information is on your credit report? About.com. Retrieved 26 December 2007 from http://homebuying.about.com/cs/ credit/a/credit_report.htm.
