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What is a Credit Rating?

A credit rating groups customers into five broad categories based on their level of creditworthiness. A one star score reflects a very weak credit score and would be viewed by lenders as being the highest risk for lending. A five star credit rating is exclusively for those with a very high credit score which indicates they are a very low default risk. Predictably a three star score represents an 'average' customer.

What is a Credit Score?

A credit score more accurately indicates your risk of default based on statistical analysis of your credit file information. A range of 0-1000 usually applies, with 0 being the worst credit score and 1000 being the best. An average score is around 750.

The score represents the likelihood that you will maintain payments on the credit agreement.

What difference does your Credit Score make?

Each lender will have their own lending criteria which may even differ from product to product. This criteria will include a credit score cut-off point, where those with a higher score will be accepted and those will a lower score will be rejected.

In reality a lender may have different score levels for different interest rates also, so you may be rejected at the lowest rates and instead be offered the product at a higher APR. A lender may adjust their cut-off points depending on how much business they are looking to get at a certain time.