Identification

According to businessdictionary.com a credit rating is a number or letter grade given to summarize your past performance in paying back debt in a timely manner. Factors such as payment history, amount of debt compared with income and judgments or defaults are used to make up your credit score.

Significance

Lenders use your credit score to determine whether you qualify for financing, what kind of interest rate they will offer and whether you will need a co-signer to secure financing.

Types

Credit ratings apply to businesses as well. However, a business credit rating is based on a letter system as opposed to a number system, with a rating of AAA typically being the highest possible.

Features

Credit scores used to be based on a scoring system developed by the Fair Isaac Company. It was known as the FICO system. But in recent years, the three major credit agencies have turned to a system known as VantageScore that uses a range of scores with the lowest being 501 and the highest being 930.

Considerations

You are entitled to one free credit report from each of the three credit reporting agencies every calendar year, but you must pay for your credit score if you wish to see it.

Source:

BusinessDictionary.com: Credit Rating

ConsumerAffairs.com: Credit Bureaus Introduce New Scoring System

My Stock Market Power: Credit Rating Definition

Resource:

Experian Credit Reporting Agency

Equifax Credit Reporting Agency

Trans Union Credit Reporting Agency