Be Careful with Credit Ratings
By Michael C. Dennis, MBA, CBF

My new accounts clerk also handles inquiries from trade creditors and banks requesting credit ratings on customers. We require companies making such inquiries to submit them to us by mail or fax. While looking for a credit report on her desk, I spotted an "interesting" credit inquiry sheet that had been faxed to us that day. On the left hand side, it asked these standard questions:

• Date account opened

• Recent high credit

• Current A/R balance

• Amount past due

• Average days to pay

• Whether or not we are a secured creditor

• Any NSF checks, and

• Our terms of sale

What caught my attention were the questions on the right hand side. We were asked to:

"Check Each of the Boxes Below that Applies to this Customer."

The choices were:

• Prompt and satisfactory

• Slow but considered good

• Slow but considered satisfactory

• Slow and unsatisfactory

• Slow and not recommended

• Takes unauthorized deductions

• Regularly takes invalid claims

• Placed for collection

• COD only

I responded to this credit rating request by stating that we do not offer any subjective ratings about our customers.

I encourage credit professionals to make sure that anyone providing credit ratings knows not to respond to these types of compound questions.