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A credit rating scale is a measure of the credibility or creditworthiness of a borrower. It is not limited to an individual alone. A credit rating scale can give you information on the authenticity of a financial institution, a corporate organization and even a country. It is thus a tool to prevent fraudulence and make the people aware and beware of falling prey to people who might be having bad credits at their back. This credit rating scale is actually prepared by the credit bureaus all over the world based on the monetary dealings made earlier by these individuals, corporation or the country. Thus in short, credit rating scale can be defined as the measure of the ability of a particular individual to repay the debts in time.

These credit rating scales are not actually preset values. Actually it is prepared only on request of a moneylender. Consider this example for a better understanding. An individual goes to a moneylender for a loan and this moneylender is not sure about creditworthiness of the individual. So he will contact a credit bureau either directly or through phone contacts in order to gain more information on the previous credits of that individual. Only after the requests of the moneylender will the credit bureaus prepare the credit scale based on the information they have already about that individual.

So depending on the credit scale rating provided by the credit bureaus, the moneylenders will decide on whether to pay the individual or not. In most cases, a bad credit on the individual will mean that the moneylender will reject the loan request. However there have been certain changes in the trend these days. Moneylenders are ready to risk their money on people who even have bad credits. The difference is that moneylenders impose high interest rates than normal in case the borrower is in dire need of the money.

There are four different types of credit ratings. They are the personal credit ratings, corporate credit ratings, sovereign credit ratings and short term credit ratings. A person credit rating is the credit rating given on a particular individual. Corporate and sovereign credit rating scales are applicable to corporate organizations and countries respectively. A short term credit rating scale is actually a credit rating on an individual which gives chances of an individual going to default within a period of one year. So in case you are the moneylender, it is advised that you make use of the credit rating scale before you lend money to a suspicious borrower.