Credit Insurance ratings

loopy lou

Hi everyone,

Can anyone tell me where i can fing credit scoring explained as i've looked through all my texts books and can't seem to find anything? Starting to wonder if i'm loosing the plot!!!

SandyHood

This isn't intended to demean your request at all.
My class have often found a jolly quiz from a mag such as cosmopolitan starts us off on the right foot.
If you find one of those multiple choice quizes where the answer 1 that gives A earns 6 points, B 4 etc, and you add up all your points to find out whether you are a boring shopper, extravagant etc then you'll have the essesnce of the credit rating methodology.

After that, you'd need to be prepared to look at slight dioffereences from one firm to another. But the level of liquidity will be very important, so acid test ratio values would be given different numbers of points e.g. 0.9+ = 1, 1.0+ =5, 1.2+ =10 , presumably accounts payable period would also be included, as well as gearing and profitability.

And just like the cosmopolitan assessment of what type of shopper you might be, this will give you a risk rating for your credit applicants.

How does your employer deal with customers who ask for credit facilities?