Sources of credit information

Last week, I had the opportunity to have a productive discussion with Mr. Nolan Bruce Allen, he is the President of Northeastern Leasing & Finance Corp., a financing and leasing company based in Grand Island, New York. He is in the Philippines to expand his business.  One of the discussions centered on how to get credit information. He expressed his “disappointments” on the difficulty to get positive information such as bank information.

During the said discussions, I promised him that I would be writing an article about this topic as soon as I can. So here it is.

Loan and credit approvals or extension of credit facility, regardless of category, requires the presence of a reasonable amount of information on which evaluation and decision could be made.  Cooperatives, just like commercial firms and lending institutions (bank, finance companies, investment houses, etc.) can access and/or get valuable credit information from the following sources.

First, the application form. There are so much wealth of “leading information” that can be generated from the borrowers/ debtors’ application form, depending on the design and thoroughness of the said form. More information can be obtained from direct personal interview with applicant. Direct interview with applicant can yield many essential information and insights about the nature of borrowing request, repayment means, business operations, management background, financial condition, credit/ bank references, family profile, and even about the mental attitude and general personality of the borrower.  Personal interview can become highly revealing that oftentimes a decision to pursue the borrowing request can be made on the spot.  It is vital, however, that the person conducting the personal interview be competent, experienced and familiar with human nature and the policies of the cooperative/ company he or she represents regarding credit matters. 

Furthermore, It is not unusual for credit dispensers to adopt a special credit application from which is filled up by the borrower and/or the applicant.  The form itself serves as part of the credit file.  

Second, references given/ gathered. The following are references that must be thoroughly obtained, gathered and checked: bank references, finance, company references, supplier and other credit references. References provided by the credit applicant serve as initial lead for further verification and evaluation. Information that must be verified includes: applicant’s past and present credit relationships with banks, financing companies, utilities, suppliers of goods and services, as well as professional and trade affiliations.

(Mr. Ed F. Limtingco can be reached at 0917-8309741 or email him at [email protected])