While dealing with a bank or a similar organization, we often encounter terms such as “credit file”, “credit report”, “credit rating” etc. People who are not much familiar with finance are often clueless as to what these terms mean. Well, going by its most basic denotation, credit file is the assortment of raw data about an individual’s financial activities. These data includes the individual’s personal information such as his or her name, address, date of birth, social security number, education, places of past and present employment etc. financial activities such as history of previous loans or mortgages, expenses, total income, net worth of property and public records and enquiries. This raw data is collected, analyzed and compiled into a form that can be read by both customers and creditors, known as a credit report.
When a person applies for a loan, mortgage or a credit card, the bank or any other institution will check out his or her credit report, so that they can estimate for themselves whether he or she will be a credit risk. The assessment of the credit report by the creditors, to predict the prospective debtor’s ability to repay the money, based on his or her record of previous financial dealings, is known as credit rating. A credit rating is done for anybody who seeks to borrow money- be that a person, corporate body, state or federal authority or even a sovereign nation. The assessment and calculation of credit score or ratings are usually by credit rating agencies. However, in case the applicant does not have a credit report, the bank or the creditor organization collects the raw data and assesses it for themselves.
Having records of bad or unpaid debts or mortgages or sudden and unnecessary expenditures can be damaging to your credibility and make you seem like a credit risk. Thus, it would be extremely difficult for you to win approvals for loans or credit cards, as no bank or any other organization would lend money to an individual they perceive to be a credit risk, that is, not likely to repay the borrowed amount of money. Avoid that from happening by looking up “get my credit rating” online. The search results will take you to websites of companies who would help you to assess and calculate your credit rating. Other reasons to help convince you are-
1. Normally, it would take a lot of time for your credit rating to be done, during which you might miss financial opportunities. But these companies will be able to assess and calculate your credit score within one or two days.
2. Your personal information will not be accessed without your prior consent. It will be protected by client confidentiality and will not be disclosed to any third party.
3. Even if you are not looking for any loan right now, it is pragmatic to draw up your credit rating and figure out for yourself whether you will be eligible for loans or mortgages in future.
4. It will not cost you much as their rates are reasonable.
5. You can regularly monitor your credit activities and will know immediately in case of fraudulence.