Definition - What does Credit Rating mean?
A credit rating is an assesment of a person's creditworthiness. Credit ratings are provided by credit rating agencies. These scores are based on a person's credit history, and how well he or she has been able to repay debt.
In the context of the law, credit ratings are often used in many legally binding transactions, such as insurance agreements, employment agreements and loan agreements.
Justipedia explains Credit Rating
If a person has a bad credit rating, then it can be much more difficult for them to get a loan or do other things that involve credit.
People with a higher credit rating are generally viewed as a lower risk for lenders, insurance companies and sometimes even employers. Lower risk means that there is less of a risk that the person will cause loss to the lender or company. Therefore, higher credit ratings are often desirable.
A person's credit rating can go down if they miss payments on a loan, or conduct other undesirable financial activity.
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