What is a credit rating?

A credit rating is a numerical score calculated by a credit bureau that indicates a person’s creditworthiness and their ability to pay off debt. The most commonly used credit rating in North Carolina is the FICO score, created by the Fair Isaac Corporation, which ranges from 300 to 850. It is determined by taking into account a person’s payment history, current debt-to-income ratio, length of credit history, new credit inquiries, and types of credit accounts. A higher score reflects a strong financial history and shows that the person is a responsible borrower and is more likely to pay their bills on time, while a lower score can indicate a person’s credit risk and can make it more difficult to obtain financing for large purchases. A person’s credit rating can be improved over time with a few methods such as paying bills on time, reducing credit card debt, and avoiding opening or closing too many credit accounts at once. Under North Carolina’s credit repair law, consumers can challenge inaccurate information in their credit report and obtain compensation if they can prove the disputed information is inaccurate. Any individual who has had their credit rating impacted by inaccurate information is eligible to take advantage of the law and pursue legal action against the credit bureaus that reported the inaccurate information.

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What is a credit rating?

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