1. Credit Ratings
Chapter 17

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

3. 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

4. 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

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

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

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

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