Credit Score is not the same as Credit Rating

Credit Rating is the value that each credit card creditor assigns to the status of your account. Your Credit Score is then calculated using all of your various Credit Ratings and other ratings for non-revolving credit.

Credit Ratings are values from R1-R9, with R1 being the best and R9 being the worst. The "R" standing for "Revolving" as in revolving credit (monthly amount is variable), which is the type of credit that credit cards are.

 

Here's a breakdown of the different values:

• R0 - Approved but not used
• R1 - Always paid on time and current (or too new to rate)
• R2 - 30+ days past due
• R3 - 60+ dayst past due
• R4 - 90+ days past due
• R5 - 120+ days past due; or collection amount
• R6 - Not specified (R5, R6, R7, R8 are variations of R4. They are rarely seen and the value usually jumps from R4 to R9 on credit reports.
• R7 - Making regular payments, paid under Wage Earner Plan (WEP) or credit counseling
• R8 - Repossession
• R9 - Charge off to bad debt

In a perfect world, all of your credit cards would hold an R1 rating, but again, since you are here, this is probably not the case.

As you pass from one threshold to another (e.g. from 30-days late, to 60-days late, etc...) your credit score will drop. This can be a traumatic thing for those of us who have mainainted a perfect payment history and 700+ credit score for most of our lives.

Unfortunately, during this time your only option may be to take this opprotunity to practice acceptance and thicken your skin.

Let's take a look at some of our debt resolution options for stopping the credit score freefall.

 

Next Page ---> "Debt Resolution Options" --->

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Debt Consolidation Assistance

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