| A credit rating represents a person's | | | | so being married will help to score a point for the |
| creditworthiness or the likelihood that the person | | | | credit rating. Similarly, if you have any dependent |
| will repay the debts in a timely manner. Lending | | | | family members, it is considered a better risk as |
| agencies like banks and credit card companies | | | | compared to someone with no dependents. The |
| refer to the credit ratings of the individual to | | | | more the number of dependents, the better for |
| evaluate the potential risk posed by lending | | | | your credit rating. The logic behind this theory is |
| money to the customer and to avoid losses that | | | | that a single, unattached person can skip town |
| they may incur due to bad debts in the future. | | | | without repaying the credit. |
| They also use credit scores to determine who | | | | 3. Creditors also want to know about the |
| qualifies for the loans and at what rate of interest. | | | | individual's background. They want to know where |
| Therefore, an individual with a bad credit rating will | | | | you live, whether it is a mortgaged house or |
| never secure a loan. Apart from banks and credit | | | | rental accommodation, the vehicles you own and |
| card companies, other organizations like mobile | | | | other personal details. Owning a large house, even |
| phone companies, insurance companies and | | | | if it is mortgaged, is a plus point. If you are a |
| government departments use the concept of | | | | person who has moved often, it will score badly |
| credit rating to judge the individual's | | | | on your credit rating. The longer you have stayed |
| creditworthiness. A few factors that decide the | | | | at your current address, the more is the credit |
| credit rating of an individual are discussed below. | | | | score, because you are a good risk. |
| 1. The age of an individual plays an important role | | | | 4. Other factors affecting the credit rating include |
| in the credit rating. Persons between the age of | | | | the kind of job you are in, the length of service, |
| 24 and 64 years will earn a point. Those below 24 | | | | monthly income, previous credit history, present |
| years or above 64 do not score on the credit | | | | debt status and the health of your bank account. |
| scale. It is possible to lie about your age, but since | | | | The above factors play an important role in |
| it is falsifying facts, it may create complications in | | | | deciding your credit rating. With some conscious |
| the future. | | | | effort on the part of the individual, it is possible to |
| 2. Unmarried persons are considered a higher risk, | | | | improve the credit rating. |