Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

A-Credit

What it is:

A-credit is the highest grade a lender assigns to a borrower.

How it works (Example):

For example, let's assume that John applies for a loan at XYZ Bank. The lender wants to evaluate John's credit to determine if he is likely to make his loan payments on time. Upon examination, XYZ Bank sees that John has never been late on other debt payments, has a reasonable amount of debt and has a very stable credit history. According to the bank's own standards, it determines that John has A-credit. That is, he is a high-quality borrower.

Why it Matters:

People with A-credit get the best interest rates. In John's case, he might get a loan with a 4% interest rate whereas a person who does not have A-credit might have to pay 6%.