What the healthy ways to build credit?

You have to start the process from the ROOT itself. i.e., before you grant a credit account to a customer, you have to be satisfied and make sure of the claims and credentials of that customer. This is possible in the following ways:

• Legal Due Diligence - Check and verify the legal documents (e.g. Trade License) of the prospective customer through reliable sources.
• Corporate Due Diligence - The industry in which the potential customer is doing business. You should consider the demand for the potential customer's products and services
• Financial Due Diligence - Review the financial performance of the potential customer by examining the financial statements along with the credit application form. You can also check with the local trade references about the payment history of the applicant.

If you carefully follow the above steps, you could definitely have accounts which honour the credit terms. This also has to be followed up by continuous monitoring of the ageing so that any possible signs of default could be identified in advance and acted up on proactively.

There are many ways to build good credit, some are as under:

1) First of all check the market reputation of client.

2) Check the business skills of business person.

3) Check the Credit Worthiness of customer from peer financials institution where this customer already doing his business.

4) Any Media news about the customer regarding their success and failure.

5) SWOT analysis of customer.

6) Financial Statements Analysis.

7) Assessment of their actual financial needs and their repayment capacity.

8) Monitoring of his financial and market conditions on regular basis.

9) Take remedial action on timely basis if there is any signal of wrong doings at customer end and worst economic condition of economy generally  and his business conditions particularly is prevailing.

Your question is very important. How to build healthy credit porfolio? There are many ways and to chose the one will depened on your unique circumstances.

1- Analyse your existing credit portfolio. Gather information about your best performing clients. Ask these best clients to refer you some good clients. Then approach these potential clients and market your load products.

2- Which sector/industry in your credit portfolio is performing well. Select more clients in the best performing industry.

3- Alway follow your credit and risk policy. No compromise on any rule