Showing posts with label credit rating. Show all posts
Showing posts with label credit rating. Show all posts

Saturday, April 27, 2013

How to maintain your credit rating!

How to maintain your credit rating? Maintaining your credit rating in the world of personal finance is essential. The credit has an influence on a lot of things we touch. It influences the conditions of bank loans, the discount interest rate and even our financial reputation. Here are some tricks that allow me to maintain a good credit rating. We live in a society where the rule of consumption plays enormously. Therefore, as a consumer, you have one day or the other the desire to own any property. Obviously, things have changed. Before you know reputable seller or practically confirmed your purchase. Now we swear by your reputation and bank credit is the king. Hence it is very important to keep your credit rating in good condition. The first thing you have to do is to build your credit rating is as follows: you must make purchases by funding. Then complete the purchase of thing in cash. Leave your money in the bank. Get now a credit card to prove your spending habits, and most importantly, payment habits. So pay your bills at the end of every month or at least your minimum balance.

Whenever there is a delay in your credit card payments that will be indicated in your credit file. This negative impact will fall on your side. Obviously, the higher your score down, the more you become a consumer uninteresting by banks. Therefore, you will lose promotions, you will have high interest rates and it will be difficult for you to build a good heritage. If you are in the category of least preferred by banks, we need to change that. There are actions to be taken, over time; you can develop yourself to be a customer who is preferred by the most popular banks. Initially, pay your bills that too on time. This is obvious, but how many people do not perfectly? Also, do not change your credit card every year. This will ensure that your credit history will disappear and your credit rating will be less beautiful.

 Avoid more credit applications regularly. Often, it is rather the others who make for us in trying to verify exactly our credit. In this case, ask if it is really necessary. If the answer is positive ask the person rather pick up your credit report of you. A request by you has no impact on your score. It is in my view you should use credit wisely and get a credit card. But settle with just one card. Having many credit cards indicates that you have the opportunity to borrow a lot, thus adversely affecting your score. Thereby maintain only a good credit card only. A good credit score will increase your chances of getting the loan as required for the purchase of your home or your car. You may receive bank discounts and preferential interest rates benefiting you. You could maximize your assets more efficiently.

Wednesday, July 13, 2011

Credit Rating Agencies the heart of global financial systems Part.III

In the United States is the SEC that accredits the rating agencies can note issuers, a special status, the NRSRO. It is now held by the five main rating agencies that represent 98% of the U.S. market. The two challengers were able to obtain this status, a prelude to any attempt to internationalize, in 2003 for the Canadian DBRS (Dominion Bond Rating Services) and 2005 to the American AM Best, which specializes in rating companies insurance.

This demand for self-regulation has led rating agencies to overhaul their practices in methodology and ethics. Indeed, quantitative approaches too opaque and often resulted in "very good" ratings of financial players to hidden risks, or having issued bonds such as "structured finance" in spite of the risks associated with the nature of these products.

So in March 2007, it revised its rating methodology for banks by reducing the inclusion of state support or supervisory authorities in order to avoid masking the credit risk inherent in each bank. In June of that year, S & P revised its criteria for assessing securitization vehicles financing leveraged to take into account the loan contracts with very lightweight protection clauses.
On June 25, 2007, the French Banking Commission released the list of ECAI distinguishes seven actors: the Bank of France, Coface, DBRS, Fitch Ratings, Moody's, S & P and Japan Credit Agency. This status enables credit institutions to use the notations of ECAIs mentioned above for France to determine regulatory capital requirements arising from Basel 2 regulations.

The market for credit ratings is changing in light of internal innovations, new regulations and fears of investors. This cache of new players those focus on different goals in the field.

Credit Rating Agencies the heart of global financial systems Part.II

The market for credit ratings in recent years is subject to much criticism. Indeed, it is the issuers that pay the agencies questioning the independence of these. How to be neutral given that the issuer needs only a single note? It will tend to compensate the agency assigning the highest rating. The multiple criteria analysis are, for obvious reasons of confidentiality, never disclosed which increases the opacity a little more of the rating process that can be conditioned on the purchase of related services commonly known as "notching."

By focusing on the area of credit institutions, that summarizes the scoring of key players reveals a strong tendency to align the ratings (all these establishments are located in the first five layers). This convergence makes difficult the choice of investors who may consider not having to provide a rating scale commensurate with the risks involved.

The three leaders in the market for credit ratings are today: Standard and Poor's, Moody's and Fitch Ratings. This virtual monopoly is that international organizations and regulators, the market is fragmented and anticompetitive. In addition, there may be twenty years since the ouster of the firms of smaller sizes, mainly through mergers and acquisitions process which may eventually become a disincentive to impartiality and innovation.

The existence of a thriving market and strongly oligopolistic have IOSCO to react on the limits of the rating agencies through the publication of a code of Conduct "IOSCO CRA Code". CESR has meanwhile called for a self-supervised after which the rating agencies have indicated their willingness to collaborate.

In January 2006, the European Commission considered the establishment of a regulatory framework to oversee the activities of rating agencies superfluous, and therefore formally requested in May 2006 at CESR to produce an annual report on the consideration by rating agencies the principles set out by IOSCO (quality and integrity of the rating process, independence and avoidance of conflicts of interest, transparency and relevance of the ratings, confidentiality of information).

Credit Rating Agencies the heart of global financial systems Part.I

The key player in financial markets over the last twenty years, the CRAs (Credit Rating Agencies) best known under the name of credit rating agencies have become indispensable in providing a double service: an evaluation of the financial solvency of debt issuers (states, local governments, financial institutions, insurance companies, businesses) and participating in the decision support by assessing the financial risk of bonds. These services, summarized in a note, reflect on their own assessment of an agency and its analysts and may result in the case of a "downgrade" or "upgrade" significant repercussions on the costs loan, refinancing or the share price of a company.

Appeared in the United States, the financial rating has grown exponentially due to the internationalization of the markets. The notation is a service agency charged by the issuer and allows investors to compare the financial situation of both sectors to facilitate access to foreign markets and to rapidly assess the overall financial situation of a company. This note is an indicator of default risk, which complements the analysis from audit firms and analysts for investment banks. It allows the emitting structure to negotiate its interest rates for financing bank or bond issues.

Despite common customers and investors, the rating system is not uniform between each agency, even if harmonization has often been stressed. Each agency therefore has its own rating system that distinguishes mainly long-term debt and short-term, and divided into several layers that distinguish investment grade (High Grade) to speculative grade (speculative grade) addressed the latter mainly to investors seeking a high level of performance.