Consider your credit rating to be like your financial fingerprint. Your rating (and your credit report) are a record of your capacity to consistently meet your financial obligations. Essentially, your rating and report is a measure of the level of risk associated with doing ‘business’ with you. That ‘business’ might include personal, home and car loans, credit cards, store credit, mobile phone and other utilities. Managing your credit rating and doing regular checks of your credit report ensure that you will find it easier, and in some instances get charged a better interest rate (where relevant). Your rating forms the foundation of your capacity to build financial independence, your ability to access credit and your financial wellbeing.
Your credit rating is a score that provides an indication of your historical financial behaviour and performance in relation to paying things. The better your credit rating, the more likely you are to make your payments on time. The lower your credit rating, the less likely you are to be able to make your repayments and hence, the more risk involved in extending you a line of credit. Your credit information is collected from credit providers, courts and other organisations by credit reporting agencies.