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Credit Rating

Definition of 'Credit Rating'

A credit rating is a predictive measure of the ability of a person or organisation to pay on time, based on credit history.

For individuals, credit ratings are a broad grouping of credit scores. At checkmyfile, the first company in Australia and UK to put credit scores and credit ratings online, we use five credit ratings. These range from one star to five star, where a five star credit rating is given to those with really good credit scores – and are of undoubted risk – and a one star credit rating is given to those who aren’t good at managing credit. The average credit rating is a three star credit rating.

Generally, an individual’s credit rating improves with age.

Although some say that credit Ratings are not used by credit providers, the truth is that they are not used for credit assessment, because that's the role of a credit score. Credit Ratings are used by marketing departments to target segments of potential customers that they think are likely to be more profitable. In some telephone systems, credit ratings are used by credit providers on a ‘triage’ basis, to make sure that calls are routed to the most appropriate persons within the organisation.

Credit ratings are also one of the easiest ways of segmenting people in geodemographic databases, which are used for a wide variety of purposes.

Companies and even countries are given credit ratings which are also a predictive measure of default or failure. These are calculated by specialist credit rating agencies, the most well-known being Standard & Poor's and Moody's Investors Service.

Use the links below to locate the term you are looking for. If you can't locate it, please get in touch.

Credit Jargon Starting 'G'

Credit Jargon Starting 'I'

Credit Jargon Starting 'J'

Credit Jargon Starting 'L'

Credit Jargon Starting 'M'

Credit Jargon Starting 'S'

Credit Jargon Starting 'T'

Credit Jargon Starting 'V'

Credit Jargon Starting 'W'

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