How Is Credit Figured?

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Credit is figured by banks and credit card companies by looking at someone's assets versus their liabilities. Discover how to get access to more credit going forward with help from a registered financial consultant in this free video on credit and personal finance.

Part of the Video Series: Credit & Personal Finance
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Video Transcript

This is financial adviser, Patrick Munro talking about how is credit figured? Credit of course is an important component of society and your success in this society depends on your ability to get credit. In a simple sense of the word those that grant credit that is to say banks and credit card companies look at your credit in a simplistic way. It is your assets, versus your liabilities, your bills that you do have resulting in the different, it's your net worth. Many people have a net loss because they have more debt than assets in which case they would have a lower credit score. That is essentially what credit companies do is they see your wealth and as a result of having a higher wealth that is net of debt you can then have access to more credit going forward. So that is an important factor for anyone to know and it is important to pay your bills on time and keep your debt down as low as possible and put as much in savings as to say assets away so that ultimately you will be granted more credit. This is financial adviser, Patrick Munro.

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