When the financial crisis hit the world in 2008 nobody thought that it would be so serious and the percentage of bad credits would be so high. Actually, the surveys show that the rate of bad credits has never been so high since 1994 which was an extremely difficult year for the world also. But why are there so many bad credits? What is the reason?
Well, we should start from a little bit further! Did you know that there is a system which estimates the credit rating in points? I am sure that most of you did not and that is why the percentage of bad credits is so high, especially in countries such as the United States. For example, there could be people whose credit rating is excellent but the do not apply for a loan or credit because they are afraid of being turned down. And I have witnessed the other case also- people who think that they are in a good finance condition and their rating is good but it is actually not! So, if we have to summarize we can say that the people are just not informed.
And now we will get back to the credit rating and how it is calculated. As a beginning we would say that all your profits, expenses are taken into consideration so that the results are absolutely objective! And as it was said above, the credit rating result is given in points: if your points are less than 620 then your credit rating is very bad; and if it is above 680 then you can calm down and get a loan or credit because your rating is pretty good.
And now I know that most of you would like to know how they can calculate their credit rating by themselves but unfortunately it is too complicated. Furthermore, that service does not cost much- the fee is probably no more than $20 as it may vary from one person to another. However, you should draw special attention to the fact that the person who calculates your rating should be an expert otherwise you may still be refused to be given a credit- the reason is that you might be told that your rating is good when it is actually not, because of the wrong calculations which only an inexperienced person could mess up!
I hope that the article was useful and it will help you learn what your credit rating is. Once you know it, you will also get to know what your chance of approval is and there will not be any unpleasant surprises!