Discuss the advantages and disadvantages of credit rating
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The main advantage of a credit rating is being rewarded for managing your budget and finances responsibly. This qualifies you for the best credit card offers, including low interest rates and cards that give you gifts, points, airline miles or monetary rewards. You will get low interest rates on other types of loans, and your applications will be approved quickly. You will qualify for insurance at preferred rates, and a good credit rating makes you look more attractive to employers as well.

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Advantages & Disadvantages of Credit Rating
By Barb NeferJul 04, 2015
People with good credit tend to think that credit ratings are a good thing because their high financial status allows them to enjoy certain advantages. Those with low credit ratings often have an opposite view because they have trouble getting loans and usually get the worst terms on any type of account. You can enjoy the advantages and avoid the disadvantages if you know what goes into your credit rating and keep it high.
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DEFINITION
Your credit rating is determined based on the information that appears in your credit reports. They list your demographic information, including name, current and prior addresses, phone number and Social Security Number. They also contain your employment information, loans and credit card accounts. Any financial judgments such as liens will appear too. Creditors may review your credit reports or check your credit score, a three-digit number distilled by Fair Isaac Corpation from all the data.
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ADVANTAGES
The main advantage of a credit rating is being rewarded for managing your budget and finances responsibly. This qualifies you for the best credit card offers, including low interest rates and cards that give you gifts, points, airline miles or monetary rewards. You will get low interest rates on other types of loans, and your applications will be approved quickly. You will qualify for insurance at preferred rates, and a good credit rating makes you look more attractive to employers as well.
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DISADVANTAGES
Your credit rating can hurt you even more when you are already having financial problems. The rating will go down if you lose your job, have a medical emergency or fall behind in your bills for some other reason. This will keep you from getting credit at a time when you might desperately need it. Your credit rating can lock you into a subprime category. You will pay extremely high interest rates for any loans you manage to get because your rating marks you as a high-risk borrower. You may have trouble making on-time payments because the loan is so expensive, which keeps you from improving your rating and thereby locking you into a negative cycle.

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Advantages & Disadvantages of Credit Rating
By Barb NeferJul 04, 2015
People with good credit tend to think that credit ratings are a good thing because their high financial status allows them to enjoy certain advantages. Those with low credit ratings often have an opposite view because they have trouble getting loans and usually get the worst terms on any type of account. You can enjoy the advantages and avoid the disadvantages if you know what goes into your credit rating and keep it high.
Advertisement
DEFINITION
Your credit rating is determined based on the information that appears in your credit reports. They list your demographic information, including name, current and prior addresses, phone number and Social Security Number. They also contain your employment information, loans and credit card accounts. Any financial judgments such as liens will appear too. Creditors may review your credit reports or check your credit score, a three-digit number distilled by Fair Isaac Corpation from all the data.
Advertisement
ADVANTAGES
The main advantage of a credit rating is being rewarded for managing your budget and finances responsibly. This qualifies you for the best credit card offers, including low interest rates and cards that give you gifts, points, airline miles or monetary rewards. You will get low interest rates on other types of loans, and your applications will be approved quickly. You will qualify for insurance at preferred rates, and a good credit rating makes you look more attractive to employers as well.
Advertisement
DISADVANTAGES
Your credit rating can hurt you even more when you are already having financial problems. The rating will go down if you lose your job, have a medical emergency or fall behind in your bills for some other reason. This will keep you from getting credit at a time when you might desperately need it. Your credit rating can lock you into a subprime category. You will pay extremely high interest rates for any loans you manage to get because your rating marks you as a high-risk borrower. You may have trouble making on-time payments because the loan is so expensive, which keeps you from improving your rating and thereby locking you into a negative cycle.
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