Credit Rating

Credit Rating

A Credit rating is a system used by lenders to check a borrower’s creditworthiness. The lenders get an idea based on the borrower’s credit rating on how likely they are to pay back the loan amount. This rating decides whether the individual borrower or any organization would be given a credit by the lender.

Like credit rating, there are other terms related to it which also gives the lender an idea about how were your transactions through the years and your personal information. The terms are named as Credit score and credit report.

People always consider credit rating and credit score to be the same, but there are differences between the two. A credit rating consist of a series of letters and each lender would have a different way of deciding whether you should get a loan or not depending on it. And a credit score consists of numeric data which helps lenders to get an idea of the borrower’s credit history.

credit rating uk

Difference Between Credit Rating, Credit Report and Credit Score

A Credit rating is a system that tells how likely is an organization or an individual to get a loan from a lender. A Grade is given by the Credit Rating Agency (CRA) which consist of series of letters ranging from AAA to D.

Credit score, on the other hand, is a score given depending on your past financial transactions. You can have a score ranging from 0-999. Depending on your score you can have a bad credit score or a good credit score. If you have a good credit score the lender won’t hesitate in giving you a loan. Although, if your credit score is bad the lender would have second thoughts about giving you a loan. You can apply for very bad credit loan no guarantor in this case.

Credit Report consist of your personal data and past borrowing details. This contains –

  • Name, address, date of birth
  • Credit searches
  • Any defaults on your payments
  • Missed or late repayments
  • Electoral data


Importance of Credit Rating

Credi rating is important as it tells lenders the creditworthiness of the borrower, how likely are they to make the repayments. If you have made repayments on time, have not defaulted on your loan, and are using your credit responsibly, it gives positive signals to the lender that you can make repayments on time.

Lenders can also take into consideration your salary or any previous data transactions with them that you have submitted to your application. The previous data transactions can be the use of their services in the past.


Improve Your  Credit  Rating

If you want lenders to trust you with a loan, you should try to improve your credit rating and keep it accurate.

You should make sure that the data credit rating agencies have of you is up to date and accurate. Check if your current address is as same that you have provided if you have moved update your electoral register.

If you have never taken credit before, consider taking a small credit and make regular payments. This will help you to establish your credit history, which would have a good impact on your credit rating.


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