Building Credit


Credit Score

Unless a person is paying by cash, that person is using credit.  Good credit means easy acceptance with favorable rates and prices.  Poor credit means extraordinary high rates and prices or flat out declined applications.

Although there are several credit rating systems, the credit rating on most applications is typically based on the FICO (Fair Isaac Corporation – www.fico.com) credit score, which is comprised of the following:

35% - Payment History
30% - Amounts Owed
15% - Length of Credit History
10% - New Credit
10% - Types of Credit Used








The score is generally used as the guideline and the score level used ranges from whatever a particular finance department of a company determines to meet their needs.  The following is an example of the various ways a company determines credit worthiness:

 
Credit Score
Interest Rate
Classification
710 and above
3 – 4%
Super Preferred
660 – 709
5 – 7%
Preferred
610 – 659
9 – 11%
Standard
Below 609
15-16%
Select
 Companies use their own criteria and scale amount levels.  
This is merely an example closest to the norm.



The goal is to be 720 or above.