When a person applies for a loan, the financier scrutinizes that individual's credit rating. A credit rating is a score that has a basis on how a person pays his or her bills on time as well as the person's employment status and residency. It provides finance companies an idea of how credit worthy a person is and how well that person would be able to meet the credit obligation. A majority of the rating is based on how well a person has paid past obligations on time each month. A person who has paid his or her bills on time with few or no defaults generally has a good rating. People who have defaulted on loans, credit card bills, and other expenses often have lower ratings. The length of time a person has been employed by the same employer also tends to be factored into his or her rating.