A credit rating assesses the credit worthiness of an individual, company, or a country. Credit rating, typically tells a lender the probability of the subject being able to pay back loan, it greatly know influence the result of your mortgage loan or credit card application and adjust insurance premiums, determine employment eligibility, and establish the amount of a utility or leasing deposit.

An individual's Credit history is compiled and maintained by companies called credit bureaus, credit worthiness is usually determined through a statistical analysis of the available credit data, commonly know as credit score. Your credit score, along with credit report, affects your ability to borrow money through financial institutions such as banks.

The main reasons for bad credit ratings are -

Tax liens
Bankruptcy
Late payments
Credit card debt
Disputed payments
Collections accounts
Inaccurate charge-offs
Unauthorized inquiries
Foreclosures on homes, cars etc
Civil claims, law suits, and liabilities

Credit bureaus get information from many sources and because of which chances of wrong entry and high, incorrect information damage your credit report and lower your credit scores. If your credit score seems bad, don’t become hopeless - there are ways to improve your credit rating.

Lot of not-for-profit credit counseling agencies offer such service, they will send a copy of your credit report along with guidelines to repair your credit score. The effort is to fix errors in your credit report to improve your credit scores legally; these credit repair agencies can effectively assist you in repairing your credit score to a more accurate, positive score.