Credit Ratings Chapter 17

What is a Credit Rating? A customer’s credit rating is the measure of creditworthiness based upon an analysis of his or her history.

Ways to Rate Credit 1. Point system Debt and # of late payments most commonly used by Bureaus Point Factors will be assigned based upon… Debt and # of late payments Open accounts Current employment Amount of income

2. Rating System Rates consumer on how reliable they are charging and paying back debt. Information given to subscribers They then decide to take customer on Rate a person either excellent, good, fair, or poor

Credit Rating Status EXCELLENT -“A” Rating; well established Must pay bills before due date Never missed a payment

Credit Rating Status cont’d GOOD “B” Rating Must pay bills within grace period Does not miss any payments

Credit Rating Status cont’d FAIR Usually pays within grace period Late charges may apply at times Slow in paying but fairly dependable

Credit Rating Status cont’d POOR Usually denied credit Payments usually missed and reminded frequently Failed to pay debts, filed for bankruptcy