How to Conduct Credit Investigation

Most businesses extend credit to their customers. This has become an essential practice where most customers acquire certain products or services first and decide to pay the amount at a later date.

Hence, a credit line is established between the two parties, and where the customer owes a debt, he or she will need to pay it. Failure to do so will be considered negligent on part of both sides. Not only will the customer’s credit rating be affected, but the lender will be blamed for not being thorough with his investigation in the first place.


  • 1

    Whats the number?

    The borrower must know the exact amount of money he or she requires as a loan.  Most lenders will need to assess whether a particular borrower has done his or her homework and this could be the starting point. Inquire about the monetary value attached with the loan.

  • 2

    Why does the borrower need money?

    It is important that the borrower reveals details on how he or she intends to use the money. For honest activities, the borrower will be more than willing to share the purpose and requirements. Make sure you inform the borrower that he or she needs to make proper assessments before applying for a loan.

  • 3

    Time frame

    Ask the borrower about the time frame of the loan - when he or she will be able to close the loan account. A trustworthy borrower would have considered his options and will be in a position to provide a good estimation.

  • 4

    Repayment methods

    The question has become relevant due to the increasing numbers in reported bad debts. A lender should inquire about the borrower's future prospects and how he or she intends to generate income. A borrower who knows about the business will be in a position to give honest answers about future income flow.

  • 5

    Background credit check

    Although your client may not like it, but make it clear that you are going to do a background check on his or her credit history before granting the loan. A reliable client will have no problem, and will further assist you to expedite the process.

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