Credit card ratings

Alex Daskaloff developed Daskaloff rating which is an evaluation protocol for U.S. credit cards. Daskaloff rating is for helping the consumers to know the facilities offered by the credit cards to the credit card owners and also the cost associated with the cards. This rating protocol uses points and it is sub-divided to a couple of sub-systems namely Benefit Rating and Overall Rating. Overall Rating provides an estimation of the credit card’s value to the owner of the credit card in comparison to the other cards that fall under a similar category, for example, cash back cards). Benefit Rating shows the other services and benefits like: concierge service and rental vehicle insurance which the card company extends to card holders.

Every category of credit cards has various rating parameters that number anything between 15 and 40. When a particular credit card has a high rating, it means that following are its features: nil annual fees, less interest rate, rewards that are not limited, no charge associated with reward programs and discounts on products. On the other hand, cards with less rating can be considered to have the following – higher interest rates and annual fees, no waiver in application fees, nil grace time and only limited benefits.

You should understand that the rating system is not associated with any of the following – customer service quality, penalties like fee for over limit and fee for late payment and email communication (online services). Annual percentage rate (APR) of the overall rating for the purchases that are less than six percent is 18 points; it is 12 points and 6 points for less than 9 % and 12 % respectively. It is - 6 points for those purchases that exceed 17 %.

CRA means credit rating agency and it is a firm which is responsible for assigning credit ratings for debt instrument issuers. Debt servicers too are assigned ratings for some cases. Mostly, the securities issuers are the local governments, state governments, special entities or companies. It can also be national governments which issue bonds which can be used for trading in the secondary market. Credit rating considers the credit worthiness of the issuer which means the ability to repay a loan. It affects the rate of interest that is applied to securities that are issued. The company which issues the individual credit scores is known as consumer credit reporting agency or credit bureau.

The ratings find usage among governments, broker-dealers, investment banks, issuers and investors. They use those credit ratings of rating agencies which offer to investors its provision of alternatives for investment and the measure of the credit risk which is easy enough. Broker-dealers and Investment banks use the credit ratings for assessing their risk portfolios which means the total risk of their investments, all put together. Big players like major broker-dealers and banks use CRA ratings for making risk calculations on their own and verifying it. Credit ratings are also used by regulators for the purpose of regulation.