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Sources of Credit Information

The key sources of credit information are: 1) Mercantile agencies that gather and distribute information about the credit position of individuals, firms, and businesses. 2) Reports from salesmen who have direct contact with buyers and can provide intuitive insights. 3) Market research departments that also collect relevant credit information. 4) Local banks and attorneys, though their reports can be partial or indifferent. 5) Trading credit information with other credit managers in related industries.

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Johainna Sales
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856 views10 pages

Sources of Credit Information

The key sources of credit information are: 1) Mercantile agencies that gather and distribute information about the credit position of individuals, firms, and businesses. 2) Reports from salesmen who have direct contact with buyers and can provide intuitive insights. 3) Market research departments that also collect relevant credit information. 4) Local banks and attorneys, though their reports can be partial or indifferent. 5) Trading credit information with other credit managers in related industries.

Uploaded by

Johainna Sales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Sources of Credit Information

Sources Of Credit Information

• To bring the making of credits down to a systematic and


scientific basis there are four sources from which the credit
man may draw: Mercantile agencies, reports from the trade,
reports from the salesmen, reports from local banks or
attorneys.
Sources of Credit
Information

Market
research Credit
Salesman Department Agencies
Sources of Credit Information
• Salesman as sources of credit information
They have direct contacts with the buyer in the field
of their operation.

• Market Research Department


They also provides credit information this is due to
the observation that researchmen engaged in the
collection of needed information.
Sources of Credit Information
• Credit Agencies
Gathers and distributes information about the credit
position of individuals, firms, and position.
Sources Of Credit Information
• Mercantile Agencies
The report of a mercantile agency is the basis from which
a credit man can work, all additional information qualifying the
report given him. His past experience must determine its
degree of accuracy and to what extent a report is to be
absolutely relied upon. The effect upon the merchant of the
existence and supervision of the agency, is a salutary one,
giving an extra incentive to keep his commercial record clean
Sources Of Credit Information
• Trade Information
By exchanging information with other credit men in the same
or allied lines of trade, many problems in credits may be
simplified. Such information, however, has the disadvantage of
being slow to secure, as a merchant's creditors may be widely
separated.
Sources Of Credit Information
• Salesmen's Reports
Information from salesmen, under ordinary conditions, is
peculiarly valuable. The salesman is posted as is no one else by
frequent visits, knows the buyer's strong and weak points, the
general condition of trade in the town and surrounding country,
and if shrewd, can intuitively sense the moral hazard of an
account from actual contact with all the conditions surrounding
it. If a salesman reports his opinion of each risk assumed by the
house it does not take long to tell the value of his observations
and whether he possesses the capacity for giving a dependable
rating.
Sources Of Credit Information
• Local Sources
Information obtained from local sources is open to various
faults, partiality or hostility to the one reported on or
indifference to the correctness of the report, being among the
number. Banks often take the attitude that they are not called
upon to make a report, particularly upon a customer not a
depositor and of whom they have no accurate knowledge other
than of a general nature. Attorneys' reports are of all kinds,
frequently carelessly irresponsible, the ordinary attorney not
being an accurate judge of the financial condition of a business
man.
Two Types of Credit Rating Agencies may noted:

• Agencies that provide credit information with regard


to businessmen and companies

• Agencies that provide credit information with regard


to individual purchasers.

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