Credit Rating
A credit rating is a measure of an individual’s or organization’s creditworthiness. Credit ratings are assigned by credit rating agencies, and used by lenders to determine whether to extend credit, and at what interest rate.
Individuals with high credit scores are generally considered to be lower-risk borrowers, and are more likely to be approved for loans with lower interest rates. Conversely, individuals with low credit scores are considered higher-risk borrowers, and may be denied for loans altogether, or offered loans with higher interest rates.
Credit ratings can also affect an individual’s ability to rent an apartment, or obtain insurance. In some cases, employers may also check applicants’ credit scores as part of the hiring process.