Italy suffers a credit ratings blow by S&P and Fitch

Italy's credit rating was lowered yesterday by Standard & Poor's (S&P) and Fitch Ratings in a blow for Prime Minister Romano Prodi after he pledged to trim the government's debt and deficit to defend the nation's creditworthiness.

S&P cut Italy's rating to A plus, the second lowest of the 12 nations using the euro after Greece. Fitch trimmed the rating to AA minus from AA.

Italy became the only euro zone country to suffer two rating reductions since the start of the single currency in 1999.

"Ironically, to the extent that it raises Italy's borrowing costs, the downgrade makes it more difficult to reduce the debt and deficit," said Marc Chandler, the global head of currency strategy at Brown Brothers Harriman in New York.

Prodi had tried to stave off a rating cut with a draft budget that includes e34.7 billion (R328 billion) in spending reductions and revenue-raising measures. He said the plan would bring the deficit back within EU limits.

S&P said Prodi's budget did not do enough to cut spending and relied too much on growing tax revenue to lower the deficit.

Prodi must pass the budget by the end of the year.

He has just a single-vote majority in parliament and his own allies have already introduced 250 amendments to the plan that could complicate its passage. Prodi has reduced planned spending cuts by e5 billion to appease allies, saying it would be offset by higher-than-expected tax revenue. - Bloomberg

What is in a Credit Score

Let us see what is in a credit score?

When you apply for credit--whether a credit card, ear loan or a mortgage--lenders want to know what risk they'd take by lending money to you. The Fair Isaac Corporation (FICO) scores are the credit scores most lenders use to determine your credit risk-the higher the score, the lower the risk. You have three FICO scores, one for each credit bureau--Equifax, Experian, and TransUnion.

The method used to calculate the credit score is that data is grouped into five categories with percentages that reflect how important each of the categories is in determining your score.

Your credit score can be friend or your enemy, and by maintaining good credit, your score can actually put more money into your pocket.

The higher your credit or FICO score, the less you'll pay in interest and the more you can effectively manage and accumulate wealth.A low credit score means that you will pay a higher interest to borrow money and/ score.Another reason to manage your credit wisely to earn a high credit score is to make a difference in employment and insurance premiums.