Credit recommendation

A credit recommendation is a recommendation for credit to a customer - business or private individual. Credit recommendations have historically been based on very limited information and have typically been a "yes to credit" or "no to credit".

In the past, credit recommendations have often been linked to an entry in a debt register such as RKI or Debitorlisten. If the customer was in a debt register, it was "no to credit", while no registration in a debt register meant "yes to credit".

Many companies still use these relatively simple credit recommendations, even though it's easier than ever to get a more detailed picture of whether a customer should get credit or not.

Why credit recommendations?

Anyone who provides credit to their customers, large or small, should continually consider whether introducing credit recommendations into their business would add value.

If your customers always pay on time, credit recommendations may not be relevant to you. But if you want to avoid giving credit to customers who can't pay and avoid losses, you should consider using credit recommendations in your business.

The purpose of credit recommendations is to ensure that the right customers get credit - or don't get credit. If your business extends credit to a customer who is not creditworthy, you risk losing all or part of the amount.

Remember that any form of credit carries a risk that the credit will not be paid - regardless of what the credit report says. However, the credit report can help minimize this risk.

When is a credit recommendation made?

A credit recommendation is typically prepared in connection with taking out a credit, loan or other financing.

It can either be the company itself that makes the credit recommendation or a service they buy from, for example, Collectia's Qatchr or Experian.

Some companies also choose to credit monitor their customers so that they have an updated credit recommendation on their customers. This is often called credit monitoring or simply monitoring.

Basically, the more often you receive a credit recommendation, the more accurate a picture you get of your customers' financial situation. A customer's financial situation changes over time - either for better or for worse. If the company only receives one credit recommendation, it will only be accurate at the time of taking out the loan, financing or credit.

Modern credit recommendations

Just a few years ago, a credit recommendation was either a "yes or no" to credit. Today, credit recommendations can be based on much more data, such as accounting information, tax information and similar relevant factors.

This means that modern credit recommendations no longer just give 'yes and no' answers. They can also indicate how much credit a customer should get and how long the credit should last.

Get help with credit recommendations

There are many great services available today that can help you with credit recommendations for both private and business customers.

One of these services is Collectia's own platform, Qatchr, an online platform where you can credit check your customers and based on these assessments get a credit recommendation.

For example, Qatchr can tell you the maximum amount of credit you should give your customers(credit maximum) and how long the credit should last(credit length).