The what, why and how of credit scores!
The what, why and how of credit scores, especially concerning boat loans: a person’s credit score (commonly known as FICO score) is a statistical analysis of a person’s credit file, which represents the creditworthiness of that person. A credit score is primarily based on information typically sourced from the three major credit bureaus including the payment history, amount of actual credit lines, the ratio of actual usage of credit lines, credit inquiries and collection/bankruptcy information. In the United States, FICO risk scores range from 300-850, with 723 being the median FICO score of Americans in 2010.
Lenders use credit scores to evaluate the potential risk posed by lending money to an individual. Lenders use credit scores to determine who qualifies for a loan, at what interest rate and what loan amount. Many of the larger financial institutions augment their credit process to include an internal scoring system, which can take into additional factors such as marital status, children, and work history.
Boat lenders typically like to lend to individuals they consider to have prime credit scores, which is usually considered to be over 700. There are several non-prime recreational lenders (Medallion Bank and Merrick Bank) that specialize in the boating industry and these lenders have direct relationships with boat dealers and boat finance companies.
If you are interested in obtaining a boat loan, or what to refinance your current boat loan, please click here. We can assist you with the process as well as give you a better understanding of your particular credit score.