Credit rating

Updated: Aug 20, 2021

A person’s credit rating refers to an assessment of their creditworthiness, i.e. to what extent (both in time and money) they can be allowed credit for amounts due. Credit ratings were traditionally temporary. private affairs and were discussed between banks and potential vendors with the knowledge and agreement of the person in question. In recent years a noxious tendency to ‘trade’ in credit ratings has occurred. Firms specialize in establishing the credit ratings of individuals through information gleaned from various sources, e.g. county courts, bankruptcy proceedings, lists provided by professional debt collectors, hire purchase companies, etc. These ratings are made without the consent or even the knowledge of the subject and can be made available to third parties. Some legal steps have been taken to reverse this trend and redress wrongs done to innocent individuals by inserting a clause in the UK Consumer Credit Act 1974. This States that consumers have a prima facie right to a copy of any information about them in the possession of a credit reference agency. They also have the right to have such information corrected if it is incorrect.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.