bank credit rating
Bank Credit Rating: Interpreting Your Bank's Report CardShareThisYou bank credit rating can be an important factor in determining whether you should keep your account with the bank or open with a new banking institution. During uncertain financial times, a bank's credit rating can be reassuring and indicative of it's economic health. Here’s what you need to know about your banks report card:
Why to Check the Credit Rating
A bank checks your credit rating when they decide whether or not to open an account for you. Knowing that, why not check your banks rating before you decide to give them your money? While the FDIC does not release individual banks credit rating to the public, there are places you can go and check the overall performance of any bank.
Where to Go
You can go online to sites such as Bankrate.com to review available information about the bank you are looking in to. While on the site, you will see several different options. You can search for the banks name, state, asset size, and even rating. These are great options if you are shopping for a bank without a specific one in mind.
When you see the reports populate, you will be given a few more choices. The first thing you should glance at is the financial summary of the bank. The financial summary will show you the total assets they held for the year, the amount of money they have tied up in mortgages and other loans, the amount they have in investments, deposits, if they’ve had to borrow any money, etc. You want to pay attention to the amount in borrowings. This will show you if the bank has needed to be ‘bailed out’ by borrowing from other banks or the government because the money is a loan and must be repaid.
Also look at things such as the percentage of money they have tied in to nonperforming assets, equity, and look at the overall risk capital.
This section of the report card will give you more specific information regarding the bank. If you were pleased with the information on the general summary screen, then you can see the real numbers and ratings over here.
The banks are rated on a star system. If you see a rating of NR, or no rating, this isn’t always bad. It could be the bank is too new to have information available.
Other than the star rating, you will be able to see what rate they are growing, how much they have earned, how well their assets are holding up among other things. The report cards not only give you a number, but also a quantitative value. You will be able to see how they rate with other banks. If they are performing above average in one area, but below in another, this is lined out for you in the financial memos.
bank credit rating