Significance

• A credit rating, or score, reflects a borrower's debt repayment history. The higher the credit score, the more likely a borrower is to repay the debt.
  
  

Function

• Not only do lenders use a credit rating to determine likelihood of repayment, but potential employers use it to determine if a potential employee would manage their business and personal affairs properly.
  
  

Types

• There are three credit bureaus, Equifax, Experian and TransUnion. The credit scores issued by the bureaus for each borrower are different, because their calculation techniques are different.
  
  

Considerations

• Borrowers should review their credit ratings before making major purchases to ensure that errors in reporting do not negatively impact their credit rating.
  
  

Warning

• Borrowers need to immediately report any errors found in their credit rating. Some errors are easy to remove, while others may require the assistance of a lawyer.