Credit control, also known as credit polices, involves the policies implemented by companies to speed up sales of goods or services via the extension of credit. This credit control is often accompanied by financial management systems such as credit risk management, credit scoring and credit risk management.
However credit control is an essential management tool for many business sectors because it enables businesses to get fast access to credit which could be very critical in certain situations. For instance fast credit may be required to meet short-term cash requirements, for instance during seasonal promotions or for long term projects, such as purchases of plant and equipment or supplies that are used to maintain and run a company’s operations.
The process of credit control policies consists of three separate elements. These include collection activities, credit control policies and credit-based customer relationship programs. Collection activities include those activities that are used to recover debts from consumers.
Collection activities can be done directly by a company such as by a collection agency or broker, or they can be undertaken by third parties such as collection agencies or brokers. Examples of collection activities include call centers, telemarketing, debt collection and debt collecting.
A credit control policy is then designed to control any debt recovery activities that do not relate to collecting a debt. This includes activities such as foreclosure, repossession and bankruptcy. Any credit control policy should therefore contain a mechanism for encouraging prompt payment of debts by consumers. If this is done, a good credit history will be achieved because debts will be recorded on a credit record which remains for seven years.
Another element of credit control is to ensure that any credit record that is considered is set against a consistent credit record. This will mean that if the same debtor goes into default one time with a debt then this is reflected in the credit record, even if it has been paid off previously. It is then up to the lender to determine whether or not to place the record into the credit record so that when it is looked at next time a lender will see a similar pattern of behavior.
In practice most lenders are able to ascertain a pattern of poor credit history quite quickly by looking at the credit control policy that has been put into place. When an inquiry is made into your credit file by a lender on the credit control company that has monitored your file will show whether or not the request was denied.
They will also show the reason why the request was denied and the reasons why the request was subsequently denied. The credit control company will then consider whether to extend credit to the consumer based on the information that they have from the three main credit bureaus.
The credit control policies that you get yourself into are very important. Most lenders tend to lend to those that they feel they can reasonably expect to repay. Therefore, a good credit control policy can help you to prevent the possibility of them extending credit to you when you are not in a position to repay it. However, there are times when a lender is forced to extend credit even if you do not have a good credit history.
One example of such a situation would be when you are involved in a car accident and are required to make a claim. Normally you cannot be expected to make another claim for a certain period of time. However, if you have not complied with your credit policy for this time then your credit policy company can give you a cash discount for making the first claim. The cash discounts for first time claims are normally quite substantial.
There are other situations where you may be able to extend credit during a period of time when you are not in a position to meet repayments. For example, you could use a personal loan to pay off a charge off that you have already paid off.
Another example where you could use a cash discount to extend credit is if you were renting property and defaulting on the rent payments. These are just some of the ways that you can use credit control to keep your finances under control. Although credit control is difficult to maintain at times due to credit defaults, it is always better than falling into default.