The evaluation of an applicant begins when he fills a form providing basic financial and credit data and references. Additional information will be obtained from other sources depending on time and expense and size of credit involved. The credit analyst may obtain information from the following sources.
Financial Statements- The seller may request the audited financial statements of the applicant for a number of years. The trends shown by the statements would help gauge financial strengths.
Credit Rating And Reports- Credit rating agencies provide subscribers with credit rating and estimates of overall financial strength for many companies (Dun & Bradstreet is the largest mercantile credit reporting agency in the world. In Kenya, the industry is in its infancy with Metropol Rating Agency one among the very few firms active).
Bank Checking- The applicant’s bank could be a good source of information for the credit analyst. The credit analyst can obtain information such as average cash balance carried, loan granted and recovery of loan experience. Despite existence of banking secrecy laws, the credit applicant will allow his bank to provide the information in order to facilitate his being granted credit.
Trade checking- Credit information is frequently exchanged among companies selling to the same customer. Companies can ask other supplies about their experience with an account.