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A credit rating is often interchangeable with a credit score making the line between them murky.  That being said a big distinction is the difference in the grading system.

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1.  I was surprised at the complexity of the credit rating grading systems compared to individuals credit score.

2.   Seeing how you should research credit ratings when investing in government bonds or large corporations was nice to know how the grading system actually worked.

3. If I had to pass any of this knowledge on hit would be to run through the grading system so they would know what the results of these reports

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As you can see S&P, Moody's and Finch make up almost all of the credit reports published.

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This is a chart of the three big credit rating companies grading systems. They really aren't that different but each is unique.

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This video is a nice representation of what credit agencies do and shows the amount of influence these agencies can have over corporations and developing countries.  They show how the agencies favour a more particular vision of what deserves a higher rating.

I found this video helpful because it shed light on what these credit agencies do and shows how much influence these agencies have without strict regulations.

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The film introduces into the activity of rating agencies and their growing importance for developing countries.

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In this video this shows you when you an investment that would recommend researching these rating to make an educated investment.  The video also breaks down the difference between companies grading systems because they are quite similar.

I chose this video because it gave me a real scenario where you would be looking at and comparing credit ratings. I also found the way the showed the distinction between the different credit rating companies.

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This article goes into deeper depth of what a credit rating is.  It touches on when it is used compared to a credit score, what affects your credit rating and even examples of credit ratings.

I found this article helpful drawing the line between the credit scores and credit ratings. Which are that most of the time not always individual consumers are given scores while large corporations or businesses are given a letter grade or credit rating.

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Credit rating

What is a credit rating?

A credit rating is a measurement of a person or business entity's ability to repay a financial obligation based on income and past repayment histories. Usually expressed as a credit score, banks and lenders use a credit rating as one of the factors to determine whether to lend money. Individuals receive credit ratings from one of the three major credit reporting agencies in the U.S.: TransUnion, Experian and Equifax.

Deeper definition

Credit ratings can determine whether you qualify for financing. Your credit rating is a measurement of your past repayment history on debts including credit cards and personal loans, which gives lenders insight into the likelihood of you paying them back if they approve you for a loan.

If you maintain a high credit rating, the likelihood of banks and lenders approving you for financing are high. A poor credit rating may represent an inability to repay debt and limit your financing options.

Credit ratings and credit scores often work interchangeably. For example, most businesses receive credit ratings expressed as letter grades (such as triple-A, double-A or A) from agencies such as Standard & Poor's, while you receive a rating expressed as a score, known as a FICO score.

The most common factors that affect your credit score are the length of your credit history, past repayment history and your credit utilization. The three credit reporting agencies take that information and build your credit profile, which will determine your overall credit rating and score.

Want to know the difference between a credit report and a credit score? Find out today.

Credit rating example

Your credit rating or score is never a static number, and it can change based on new information that financial institutions send to the reporting agencies. If you miss a payment or apply for a new line of credit, that information is forwarded to the credit reporting agencies. If you have a high credit rating, one missed payment can lower your credit score.

Do you want the best rates possible on your next loan? Learn more about FICO scores.

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A credit rating is a measurement of a person or business entity's ability to repay a financial obligation based on income and past repayment histories. Usually expressed as a credit score, banks and lenders use a credit rating as one of the factors to determine whether to lend money.

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This interview is being conducted with Standard and Poor's Director of alien business and head of corporate development.  They walk you through the process the company goes through to issue a credit report to a business from the beginning contract to the published credit rating.

This video was very helpful in the sense of getting to know where these ratings are actually coming from. In the video they touch on the physical work that is being done by their analytic teams who are the ones that actually determine the credit rating through various steps.

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This video gives a thorough visual representation of what a credit rating is.  While also giving a complete picture of the letter grading system used for credit ratings.

The most helpful part of this video for me was the breakdown of the credit rating grading system. Compared to credit scores the grading system is more complicated and has many grade within each risk category.

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Credit Ratings Explained : Why Is It Important For A Country? [ Animated ] | ThingsToKnow

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This article from the government of Canada can help maintain and raise your credit score.  It gives you many ways to achieve your goal of having a better credit rating.

I found this article helpful for a few reasons, one being its from our government given specific tips of how to boost your credit rating. Another reason this article was helpful was the amount of ways you can approach to achieve your goal.

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Monitoring your payment history

Your payment history is the most important factor for your credit score.

To improve your payment history:

always make your payments on time

make at least the minimum payment if you can't pay the full amount that you owe

contact your lender right away if you think you'll have trouble paying a bill

don't skip a payment even if a bill is in dispute

Get electronic alerts from your financial institution

Your financial institution may send you an electronic alert when the credit available on your credit card falls below a certain amount.

These alerts may help you manage your day-to-day finances, such as your credit payments.

Learn more about these electronic alerts.

Using credit wisely

Don't go over your credit limit. If you have a credit card with a $5,000 limit, try not to go over that limit. Borrowing more than the authorized limit on a credit card may lower your credit score.

Try to use less than 30% of your available credit. It's better to have a higher credit limit and use less of it each month.

For example, suppose you have a credit card with a $5,000 limit and an average borrowing amount of $1,000. Your credit usage rate would be 20%.

If you use a lot of your available credit, lenders see you as a greater risk. This is true even if you pay your balance in full by the due date.

Improving your credit history

The longer you have a credit account open and in use, the better it is for your score. Your credit score may be lower if you have credit accounts that are relatively new.

If you transfer an older account to a new account, credit bureaus consider the new account as new credit.

For example, some credit card offers come with a low introductory interest rate for balance transfers. The new card on which you transfer your current balance is considered a new credit product.

Consider keeping an older account open even if you don't need it. Use it from time to time to keep it active. Check your credit agreement to make sure there is no fee if you keep the account open.

Limiting your number of credit applications or credit checks

Credit inquiries, also known as credit checks, count toward your credit score. It's normal and expected that you'll apply for credit from time to time. When lenders and others ask a credit bureau for your credit report, they record it as an inquiry.

If there are too many credit checks on your credit report, lenders may think that you're:

urgently seeking credit

trying to live beyond your means

To control the number of credit checks on your report:

limit the number of times you apply for credit

get your quotes from different lenders within a 2-week period when shopping around for a car loan or a mortgage. Credit bureaus will combine and treat your inquiries as a single inquiry for your credit score

apply for credit only when you really need it

"Hard hits" versus "soft hits"

"Hard hits" are credit checks that appear on your credit report and count toward your credit score. Anyone who views your credit report will see these inquiries.

Examples of hard hits include:

credit card applications

some rental applications

some employment applications

"Soft hits" are credit checks that appear on your credit report. They're recorded on your credit report but only you can see them. These credit checks don't affect your credit score.

Examples of soft hits include:

requesting your own credit report

businesses checking your credit report to update their records about an existing account you have with them

Diversifying your credit

Your score may be lower if you only have one type of credit product, such as a credit card.

It's better to have a mix of different types of credit, such as:

A mix of credit products may improve your credit score. Make sure you're able to pay back any money you borrow. Otherwise, you might end up hurting your score by taking on too much debt.

Related links

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credit score; credit check; improving credit score; credit score check; how to build credit; how to improve your credit score; how to increase your credit score; how to raise credit score; how to increase my credit score; how to improve my credit score; how to build your credit score; how can i increase my credit score; how to get a better credit score; how to build a good credit score

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What affects your credit score and how to improve it.

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The risks assessed on credit reports are the same as your credit score.  This article lists and explains many factors that can affect your credit score.

I liked this article because it broke down the many reasons your credit score or rating can be lowered. To name a few factors effecting this rating can be from payment history, credit utilization, credit history length, and new credit as well.

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What Affects Your Credit Scores? – Experian - Experian

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Learn about what factors affect your credit scores, steps you can take to improve your credit and how to check your credit score for free.

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This article compares the differences and similarities between credit scores and credit ratings.  Credit ratings are often expressed as a letter grade representing the creditworthiness of a borrower.

I chose this article to gain some clarity of the actual differences between credit ratings and scores.  The main difference between these are a score is a number and a while the rating is a letter grade.

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Credit Rating vs. Credit Score: An Overview

Credit rating and credit score might be used interchangeably in some cases, but there is a distinction between these two phrases. A credit rating, often expressed as a letter grade, conveys the creditworthiness of a business or government. A credit score, usually given as a number, is also an expression of creditworthiness that can be used for businesses or individual consumers.

Certain credit scores (for instance, the Dun & Bradstreet PAYDEX, Experian's Intelliscore Plus, or the FICO LiquidCredit Small Business Scoring Service) apply exclusively to businesses.

As a consumer, your credit score is a number based on information from your credit reports at the three major credit reporting bureaus -Equifax, Experian, and TransUnion. When it comes to applying for a personal loan, a mortgage or a new credit card, you'll be interested in your personal credit score.

Both ratings and scores are designed to show potential lenders and creditors a borrower's likelihood of repaying a debt. They are created by independent third parties, rather than by creditors or consumers. These services are paid for by the entity requesting the credit score as well as by the creditor.

Key Takeaways

Credit Ratings

When creating a credit rating, all agencies can set their own scales, but the ratings most popularly used are produced by Standard & Poor's. It uses triple-A ratings for corporations or governments that have the strongest capacity for meeting financial commitments, followed by double-A, A, triple-B, double-B, B, triple-C, double-C, C, and D for default. Pluses and minuses may be added to distinguish differences between ratings from "AA" to "CCC."

To calculate these ratings, S&P looks at a business's or government's history of borrowing and repaying loans. Fitch and Moody's are two other companies that also create credit ratings. The three organizations also assign outlook ratings (negative, positive, stable, under review, and default) to countries. These indicate the potential trend in a country's rating over the next six months to two years.

Consumer Credit Scores

In contrast to credit ratings, credit scores are usually expressed in numbers. The most commonly used credit score in consumer lending decisions is the FICO, or Fair Isaac Corporation, score. FICO takes information from the three major credit reporting bureaus and uses it to calculate an individual's credit score.

The three bureaus also generate their own credit scores for individuals. These will give you a general idea of where your credit stands and the factors affecting it, but most lenders look at a FICO score rather than these scores when assessing the creditworthiness of a consumer.

Credit factors such as your payment history, the amount you owe, how long your credit accounts have been open (your credit history), new credit, and the mix of credit types go into a FICO score. These scores range from 300 to 850; the higher a consumer's score, the better. Credit scores are typically grouped into ranges like excellent, good, fair, and poor.

Each lender will have its own guidelines for granting credit, but generally, scores higher than 720 are considered to be excellent, while scores between 690 and 720 are considered good and express that the borrower is relatively safe. Scores lower than 690 but greater than 650 are fair. Borrowers with scores in this range may have a few delinquencies in their credit histories. Scores below 650 are considered poor.

Key Differences

Although scales may vary, the most commonly used scales for both credit ratings and credit scores consider borrowers ranked on the bottom two-thirds of the scale to be risky. Borrowers with FICO scores from 300 to 650, for example, are considered risky, while those with scores ranging from 650 to 850 are considered fair to excellent.

Similarly, on the S&P credit rating scale, borrowers with ratings under triple-B are considered "junk," while those that fall between triple-B and triple-A on the scale are considered acceptable.

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Credit Rating vs. Credit Score: What's the Difference?

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Credit rating and credit score might be used interchangeably in some cases, but there is a distinction between these two phrases. A credit rating, often expressed as a letter grade, conveys the creditworthiness of a business or government. A credit score, usually given as a number, is also an expression of creditworthiness that can be used for businesses or individual consumers.