Having an account for a line of credit can help determine your credit worthiness this can include the obvious account like a credit card. Or the not so conventional, a direct sales account for example if you’re an Avon sales representative that sells cosmetics on your Avon account.
A credit report is a detailed report of an individual’s credit history prepared by a credit bureau. Credit bureaus collect that information and create credit reports based on the information, and lenders use the reports along with other details to determine loan applicants’ credit worthiness.
A high credit score provides high creditworthiness. In addition, creditworthiness considers other factors such as your age, income, financial obligations, employment status, and total debt owed. Also includes types of accounts, length of payment history and the ability to repay debt.
For businesses, a company’s credit is tied to the creditworthiness of their worst customer. As a consequence of late payments, companies may then have to pay their own suppliers late. This is for B2B sales that are transacted on credit. Failures in trade credit can have a ripple effect on the entire industry of a company.
And when it comes down to it your credit worthiness is basically your credit score. A good enough credit score may be the difference in approval of a loan or credit card. In general, the higher your score, the better your chances of getting approved. Having a good credit score can also help you save on interest rates.