An individual’s credit rating is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of that individual. It is primarily used by lenders to evaluate the potential risk of lending money and by other entities, such as employers and insurers, who use it to assess the likelihood of an individual fulfilling their obligations. For example, applying for a retail-specific card often involves a credit check that influences approval and interest rates.
Understanding and maintaining a favorable rating is critical for accessing various financial products, including loans, mortgages, and credit lines. A strong rating translates to better interest rates and more favorable terms, saving money in the long run. Furthermore, responsible credit management builds a positive credit history, which can be an asset throughout one’s financial life.
