A credit score is based on a person’s payment history, how much they owe, the length of their credit history, and any new credit they may have been granted and the types of credit they have been approved for. For example, car loans, mortgages and credit cards.
A persons late or negative credit history is the biggest factor in the credit score. So when you look at a persons credit score, the lower the number, the more late payments they may have made.
A general rule of thumb is if a person has a credit score of 700 or above, they are a good risk. Anything lower and you might want to have them pay COD or pre-pay.
Another option is to give them a low credit limit, and only allow one open invoice at a time, so they can charge an order but have to pay that one back before they can charge their next order. This works well with repeat customers, such as heating oil accounts, or a type of service they use continually.
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