Buying on Credit

Paper Summary:

The paper considers, how of all the problems afflicting the United States, credit card debt and pad payments are almost as serious as overweight and bad eating habits. The paper discusses the FICO score that facilitates the task of companies offering credit with the use of a single number that displays a buyer's credit history. The paper shows how the best way to improve one's FICO score is to improve one's credit; paying debts and keeping large outstanding debts to a minimum. The paper reveals that while the specific scores are useful for merchants to determine the credit standing of potential customers, it is also useful for the individual to occasionally check his or her specific score. Nevertheless, to accept every recommendation and offer from score agencies is unnecessary and costly.

From the Paper:

"According to Coffey and Palm in "Bank Marketing", the FICO score is the most common credit score in use today. The term FICO is an acronym derived from the company that introduced the score, Fair Isaac Credit Organization. This score is used by a number of credit reporting agencies, including Equifax, Experian and TransUnion. The score facilitates the task of companies offering credit with the use of a single number that displays a buyer's credit history. Factors taken into account when calculating the score include a customer's payment history, amounts borrowed, credit history duration, new credit taken and current types of credit. The calculation then arrives at a number between 300 and 850. A higher number means better credit. So the better your credit history, the higher the score and the easier it is to get a loan. Conversely, lower scores indicate a higher credit risk, and also a merchant's tendency to loan money at a higher rate of interest."

Sample of Sources Used:

• Coffey, John J., Palm, Gene. Using Credit Scores With Your Database. Bank Marketing, Vol. 35, Iss. 3. April, 2003. Database: Business Source Premier.
• Community Banker. Credit Scores for Consumers With Non-Traditional Credit Histories. Community Banker, Vol. 13, Iss. 10. Oct. 2004. Database: Business Source Premier.
• Coombes, Andrea. Good credit means lifetime of savings. The Philadelphia Inquirer, Jan 18, 2004. Database: America's Newspapers.
• Darlin, Damon. Credit: For Those of You Keeping Score at Home. New York Times, Aug 27, 2005. Database: America's Newspapers.

More papers on Buying on Credit:

• Article Review # 52707 : "Advice on Buying or Renting a Home"
• Research Paper # 7428 : "Student Credit"
• Book Review # 117261 : "Why We Buy"

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