Why Credit Survey is Important for Businesses

Why Credit Survey is Important for Businesses

Everyone who wants to apply for credit loaning will have to go through several phases before earning his or her loan. These steps are rife with formality so that the applicants have gone through the necessary steps to earn their loan. With some paperwork and survey, these applicants would have earned their loans from their desired financial institutions. However, to make these applications work, a credit survey from the financial institution is equally important as well to ensure this. So, why is credit survey very important for businesses and for everyone involved in it?

Credit surveying is a particularly important step for financial institutions to check the background of their soon-to-be customers. This is a step where these institutions look thoroughly about the background of their customers to ensure full cooperation and profitability. During the survey, officers known as credit surveyors meet the customers to perform full inquiry about their financial capability and property ownership. By knowing this particular information, financial institutions can assess the financial background of these applicants and deciding the best kind of credit that they shall receive. This survey is also important so that financial institutions will not choose the wrong customers simply because of biased first impressions.

The main purpose of performing credit survey to potential customers is, of course, to minimize the potential risks from credit application process. This kind of fear is not exactly unreasonable. Financial risk from accepting biased or poorly received credit applications is not only detrimental for the financial institution, but also to the applicant as well. The risk will cause the excessive method of payment for the loaners and the failure for the loaners to pay their credit debts. Misunderstanding between the creditors and the loaners is another example of risk from unfair credit surveys.

Therefore, it is no wonder that credit survey is very crucial and important for financial institutions and businesses alike. Especially, businesses that provide credit loaning need to pay extra attention to how they do credit surveys in general. Why is it that way? Because, in a way, businesses thrive and profit greatly from credit loaning services in their business scheme. Miscalculation of potential risk will be sufficiently detrimental for the businesses’ income source. As such, businesses emphasize on the risk management aspect in providing credit services, with credit survey being one of the methods to perform risk management.

Understanding how risk management works is the key to how to perform credit survey properly. For businesses that rely on credit services to thrive, persuading most affluent customers is important, but assessing them is more crucial. Because customers with dubious background are prone to cause unwanted financial affairs, it is imperative for businesses to emphasize integrity during credit surveys. During these survey processions, all of the important information about the customers must be collected accordingly, lest an impartial credit application assessment shall arise. There are chances that customers are falsifying their background information, so credit surveyors need to inquire third parties to validate the customers’ data.

After all of the necessary data are collected, it falls to the creditors’ committee to decide whether the credit application is going to be accepted or not. Here, they will calculate the least amount of risk that they are going to choose when approving the credit application. While credit applications are not entirely risk-free, applications with the least amount of risk are still manageable. Businesses will have to endure manageable risks that can still be dealt with within their own financial power. Therefore, businesses should only accept credit applications in the level and nature of risk that they are ready to accept.

Other than for risk management, credit survey is also highly insightful and important for knowing the businesses’ customers. Know your customer (KYC) guideline is a guideline that requires businesses to verify the identity and background of their customers and customer profiling. For years, KYC guideline demands businesses to enforce their customers to be compliant with the existing law. Related to this guideline, credit survey is one of the most visible implementation of the KYC guideline as well. The survey is important for providing insight for the acceptance and identification process of the customers. 

By important, it means that the survey is the chance for businesses to identify the legality for the customers to apply for credit requests. Customers with dubious backgrounds will probably manipulate their received credit for unknown purposes since these purposes lie beyond the permissible deals. Therefore, KYC guideline enables the chance and permission for businesses to inquire their potential customers. Not to mention, transactional activities are prone to criminal activities as well in the modern times, so the importance of knowing your potential customers cannot be more overstated than before.

In the end, credit survey’s importance is tantamount for the businesses’ longevity. Knowing exactly what can kind of the reality in the field with Mobile Survey application will greatly help the kind of assistance the credit services can provide to their clients. Not to mention, invoking KYC guideline when surveying the clients’ background will also minimize potential criminal activities where the financial services are not being accomplices in any way possible. 


Author :

Ad Ins

Published date :

17 December 2020