A rating agency is a company that assesses the financial strength of companies and government entities, especially their ability to meet principal and interest payments on their debts. The rating assigned to a given debt shows an agency’s level of confidence that the borrower will honor its debt obligations as agreed
The Big Credit Rating Agencies:
1. Standard & poor's (s&p)
2. Fitch
3. Moody's
Credit level for rating agencies:
The debt instruments rated by credit rating agencies include
government bonds, corporate bonds, certificate of deposit, municipal bonds,
preferred stock, and collateralized securities, such as mortgage-backed
securities and collateralized debt obligations.
Major credit score factors
1. Payment history.
Payment history accounts for 35% of your fico® score
2. Amounts owed.
Using more than 30% of your available credit is a negative to creditors, credit
utilization accounts for 30% of your fico® score
3. Credit history length
the longer your credit history, the higher your credit scores, makes up
15% of your fico® score
4. Credit mixes
an indication of how well you manage a wide range of credit products. Credit
mix accounts for 10% of your fico® score.
5. New credit.
# fico score is the number used to determine someone's creditworthiness, your
credit score. Financial institutions and lenders use this as a guide to
determine how much credit they can offer a borrower and at what interest rate.
Fico scores can range from 300 to 850, the higher the number the better.
Typically, credit files contain information about two types of debt: installment
loans and revolving credit. Because revolving and installment accounts keep a
record of your debt and payment history, they are important for calculating
your credit scores.
Installment credit usually comprises loans where you borrow a fixed amount and
agree to make a monthly payment toward the overall balance until the loan is
paid off. Student loans, personal loans, and mortgages are examples of
installment accounts. Revolving credit is typically associated with credit
cards but can also include some types of home equity loans. With revolving
credit accounts, you have a credit limit and make at least minimum monthly
payments according to how much credit you use. Revolving credit can fluctuate
and doesn't typically have a fixed term.
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