Credit application process is a process where the borrower has to go through some standard procedure to get goods and service on credit for sertain specified time period. Credit sales in which goods Are sold to customer on credit i.e. customer has to pay amount of good at later date. The due amount can be collected in different forms such as lump sum payments or at installment payments.

1. CREDIT APPLICATION
PROCESS

2. Contents
1) Features & conditions for credit sales
2) Difference between condition and warranty
3) Credit checks and getting authorization
4) Credit requisition
5) Techniques for determining credit worthiness

3. Credit Sales
1 Credit sales in which goods Are sold to
customer on credit i.e. customer has to pay
amount of good at later date.
 The due amount can be collected in
different forms such as lump sum payments
or at installment payments.
2 Features:
1) It is usually extended for three months
2) It depends upon terms imposed by seller
3) No security is required
4) Transferer normally deals in goods and
services

4. Credit sale agreement
A contract for the sale of goods under which the price is payable by
installments, and the buyer becomes the owner of the goods either
when the contract is made or on completion of payment depending
on the terms of individual contract.
Retail credit facility:
it is a financing method which provides loan facility to retail
consumers for purchasing goods an services.

5. Structure of credit agreement
A credit agreement details about the borrowers responsibilities
which includes details loan, lending amounts, loan duration,
interest rates, default penalties and repayment and terms and
conditions. The contract also includes basic information of
customer and purpose of the loans.
Conditions used for sales of goods on credit:
Contract of sale is a legal contract for exchange of goods and
services from seller to buyer for an agreed upon value in money
paid or the promised to pay the same. Some provisions in terms of
sales are:
 The contract of sale is an agreement where both buyer and
seller offers and agree to buy and sell goods for price.
 It can be made in writing or by word of mouth.

6. Essentials elements of contract of sale:
a) Bilateral contract - to make contract there
must be two parties i.e. buyer and sellers.
b) Transfer of property - the objective is to
transfer the general property from seller to
the buyer in case of goods.
c) Goods - the subject matter of contract sales
of goods must be some goods. The contract
is to transfer the property in these goods
from seller to buyer.
d) Price - in a contract sale the consideration is
price. The price ,may be partly in money and
partly in goods.

7. Difference between conditions and warranty

8. Credit checks and getting authorization
Before making sales to potential customer first thing to keep in mind is
to check the customers repaying capacity. This can reduce the risk of
bad debts. Credit check is performed by retailer to check the
customer’s credit worthiness.
Need for credit checking:
 Credit check protects the interest of parties. It insure that each party
has the capacity to enter in the transaction.
 Credit check provides information about the customer’s mortgage,
credit cards, personal loans, repayment history of phone accounts
etc.

9. Procedure for credit check
Information to be collected from customers to credit check
as follows:
 Release of information – the credit checker needs to get
customer permission to get their information.
 Signature – a signature on credit application form are
taken from the customer, and all the terms and
conditions are listed in application.
 Address – having correct address of customer
 Employment – accurate employment information of
customer helps the retailer to give the goods on credit.

10. POSITIVE CREDIT
REPORTING
It includes information about current
accounts held by borrowers, date of
payment any defaults and how well the
borrower manages their regular
repayments, whether they are regularly
made on times or made late.
 PCR helps the lender much more
rounded overview of an individual
credit profile rather than just focusing
upon defaults and other negative
events.

11. Steps to follow before granting credit:
1) Create credit policy
2) Customer must complete the credit a[application
3) Check the customer references
4) Run credit check
5) Request personal guarantee from customer
6) Take security interest in products
7) Set credit limits and payment terms

12. Credit requisition
It is a request for credit. It includes amount and type of credit
requested. It also includes the applicants credit score.
The credit requisition document requires information about
following:
 Desired items and services
 Possible venders to fulfill orders
 Any budget or proposal received
 Delivery instructions
 Contact information

13. TECHNIQUES FOR DETERMINING CREDIT WORTHINESS
Credit worthiness is a valuation performed by the retailer that
determines payment capability of the customer. It considers
factors like repayment history and credit score.
How to check customer’s credit worthiness:
 Require a credit application
 Check publicly available information

14. TECHNIQUES USED FOR
CREDIT WORTHINESS OF
CUSTOMERS
Five C’s of credit are:
1. Character
2. Capacity
3. Collateral
4. Capital
5. conditions

15. THANK YOU