Credit ratings are a numerical assessment of the creditworthiness of an individual or an organisation. They are an important consideration for businesses, as these can have a major impact on the borrowers’ financial performance.
The ratings are used by lenders to determine how risky lending to a particular customer or business might be and the likelihood that the borrower will repay the loan as and when due. Credit ratings can also be used by investors to evaluate the potential returns from investing in a company.
Credit ratings can range from AAA, which is the highest rating, to D, which is the lowest rating. The higher the rating, the more likely it is that a borrower will make timely payments on their loan and therefore pose a lower risk to lenders and investors.
There are different types of credit ratings and rating agencies, each one has its own criteria for assessing the creditworthiness of a business or individual. The rating determines the availability of credit to borrowers and the terms offered by the lenders.
Understanding the different types of credit ratings is essential for businesses looking to secure financing for their business or attract investors.
If your likelihood of getting financing for your businesses or projects depends on your creditworthiness, how then do you improve your credit rating?
Below are a few tips:
- Access only the loans that you can conveniently pay back without defaulting
- Avoid running parallel debts that can put a strain on your repayment capacity
- Regularly check your credit report for errors or inaccuracies
- Repay your loans on schedule
- Pay close attention to the terms of repayment on your credit cards
Check out your lending options on our website and use the loan calculator to determine what you can conveniently pay back https://www.firstbanknigeria.com/personal/loans/#calculator.