Credit Rating

Hi Slater

Welcome to the forums.

The financial capability of an individual is rated by a credit rating agency. These agencies look out the ability of a person to pay back a loan. These ratings are considered to be the most important factor because it has a direct impact on the interest rates that will be offered to the consumers when they are applying for a loan. If a person has a good credit rating, then he will be offered a lower rate of interest in comparison to a person who has a bad credit rating.

Feel free to post any of your queries regarding this subject.

Regards
Roxette

Thanks for your quick reply. I wish to know how the credit score of an individual can be improved.

Hi Slater

Welcome back.

Improving the credit score generally takes some time. However, the process can be done quickly if keen interest is given on the following points:

• Your credit report should appear correct in all terms. There should not be a single mistake in it as it may have a negative impact on you in the long run.
  
  
• You should stress on making timely payments as much as possible.
  
  
• If you have any outstanding balances, pay if off quickly.
  
  
• You should not take new debt unless your credit rating improves.
  

I am sorry that I am asking too many questions. I discussed about these issues with a close friend of mine, but I was not able to have the clear picture. Your posts are helping me in understanding the concept.

Can you please tell meWhat is a FICO score and how it is calculated?

Thanks

I am glad that you are learning something from this useful forum. You can browse through the various posts in this forum to acquire adequate knowledge on debt consolidation and related issues.

The credit reporting agencies collect information about your financial worthiness from the different credit applications and other sources. This data may be a composite picture of the following:

• They analyze your bill paying history,
  
  
• The number of accounts that have been using and their types,
  
  
• Late payments,
  
  
• They see if your accounts have been sent to any collection agency,
  
  
• Your total outstanding debt,
  
  
• The age of your accounts,
  

• Past Payment Performance (35% or at least heaviest weight)
  
  
• Credit Utilization (30% or next heaviest)
  
  
• Credit History (15% or third weight)
  
  
• Types of Credit In Use (10% or least weighted)
  
  
• Inquiries (10% or least weighted).