International service Assignment Example | Topics and Well Written Essays - 500 words

International service - Assignment Example etation, it is the hope of this particular student that the reader will gain a more informed understanding and appreciation for the way in which credit rating works and whether or not it is a useful and appreciable tool that should be considered as vital for the continued economic development of the world or whether or not it should be dismissed based upon its inherent shortcomings. Firstly, in seeking to analyze the benefits of credit rating system, it should be noted that this particular system provides the individual with an incentive to pay their bills, and conduct their financial matters in a responsible manner; as a means of receiving the reward of gaining a higher credit score and having potential access to more readily available credit in the future. Furthermore, another tacit benefit that credit rating provides has to do with the level of discernment that it to financial institutions with regard to whether or not a particular loan or investment would be risky and should therefore be shunned. However, beyond the strengths and potential benefits that the credit rating system can provide, it is also inherently prone to key weaknesses and shortcomings. For instance, at the point in time in which an individual loses employment or is unable to pay their bills, due to a medical emergency or some other unexpected events, the credit rating of the individual immediately plummets. Naturally, at the point in time in which the individual is most in need of immediate credit, the access to such credit is almost all but nonexistent. Furthermore, if an individual finds themselves with extremely low credit, the interest rates that they must pay will be convinced currently high; denoting the high level of risk that the borrower engenders to the financial institution question (Mattarocci 18). As can relatively be noted, the extraordinarily high interest rates that individuals with low credit scores must pay create something of a reciprocal process through which the ability