A credit rating is a numerical valuation of someone's worthiness to receive credit or a loan; banks use it to decide whether or not someone is a good lending risk. It's based on one's past record of using credit or loans, and how faithful and timely one was in paying it off. It affects one's ability to get, for example, a home mortgage, a car loan, or a credit card.

I had a sterling credit rating six months ago when I had to purchase a car. But when I tried to refinance my condo just recently, I found out that my rating had taken a 100-point hit due to a debt that was in collections--except that I knew nothing about this debt. Turns out that my Social Security number--in the US everyone's SS number is linked to their credit rating, as well as a number of other things--had been stolen and used to open an account with the company in question. So I'm currently trying to get this issue investigated and removed from my credit report. It's hideous.

It used to be that one didn't need to pay much attention to one's credit rating, but given the level of identity theft happening--at least in the US--keeping an eye on it isn't a bad thing. And, obviously, it can affect some very significant stuff in one's life.