What is Credit Rating?
A numerical score that represents an individual's creditworthiness based on their financial history.
A credit rating for individuals, often called a credit score (like a FICO score in the US), is a number calculated from your credit report. It reflects your history of managing debt, including loan repayments, credit card usage, and bankruptcies.
Lenders use this score to assess the risk of lending to you. A higher score generally means you're seen as less risky, which can lead to easier loan approvals and better interest rates on products like mortgages and credit cards.
ExampleA borrower with an excellent credit score of 800 might qualify for a mortgage with an interest rate 1% lower than someone with a fair score of 650.