There are two types of credit applications; those specifically designed for commercial use and those intended for consumers. Contingent to your type of business, you will require one or the other; or in some circumstances both.
A business that caters specifically to businesses (Predominately B2B Suppliers or Service Vendors) should harbor a commercial credit application aligned with their credit policy. An efficient commercial credit application will request the following information:
• The Applicant’s Name, Business Address, Phone Number and Fax. (May also include an E-mail Address or Cell Phone Number for Additional Contact Purposes).
• The Applicant’s Legal Identity (e.g. Corporation, LLC, Partnership, or Sole Proprietor).
• The Number of Years the Applicant Has Been In Business.
• The Business’ Banking Information (e.g. Banking Institutions and Account Numbers Associated with the Business).
• Bank Location: Address and Phone Number.
• D & B Rating - Dun & Bradstreet
• A Minimum of Three Trade References (To Include Verifiable Contact Person – No Personal References – Business Name, Business Address, Phone Number and Number of Years Associated With The Business – 1 Year Minimum Association Required).
• Signature Line (Signature Required To Process)
Consumer credit applications are very much the same, but omit some of the specifics related to businesses. The following is an outline of what and effective consumer credit applications will include:
• The Applicant’s Name, Physical Address (No P.O. Boxes) and Phone Number(s) landline & cell.
• Number of Years At Current Residence (If less than 3 years – previous address’ for the past 5 years should be required).
• Define If The Applicant Rents or Owns The Residence.
• If The Applicant Is a Tenant, Reference the Landlord’s Address and Phone Number (contact information).
• The Applicant’s Employer with Contact Name, Address and Phone Number.
• Number of Years the Applicant has been employed With the Company.
• Social Security Number.
• Copy of Valid Driver’s License Or State ID (To Include the State Issued and Expiration Date).
• Applicant’s Banking Information (e.g. Banking Institutions and Account Numbers).
• Bank Location: Address and Phone Number.
• A Minimum of Three Verifiable Personal References (No Family References) To Include Contact Name, Address and Phone Number.
• Signature Line (Signature Required To Process).
Verify all Applicants’ credit worthiness with one or all of the credit reporting services:
• Equifax
• Experian
Verify all references; either trade references or personal references (e.g. Contact Name, Address, Phone Number and accuracy of information given).
In the event credit is approved, the Applicant should receive a copy of the signed credit application, approved credit limit and payment terms. Ask the Applicant to read the application then verbally reiterate the credit limit and payment terms to include the consequences for late payments. Require the applicant to initial each segment to verify it has been read and agreed to.
The credit limit will depend on several factors (e.g. the credit worthiness of the applicant, the number of years in business and information acquired from references, to name a few).
If you don’t have a credit application or would like to see an example, please feel free to visit South Coast Revenue online. The credit application is in PDF format to make it easy for you to download or use as an example in creating your own.
