How to fill out a credit application

When an object is bought without paying money, it is said to have been purchased on credit. The credit application letter is usually issued by guarantors, bankers and the person who give surety in case the debtor is not able to make the payment of the dues. The letter should be drafted in a way that it should take into confidence the owner of the goods regarding the sincerity of the party.

A credit application letter is a request made to the concerned authority to extend the credit period. It can be done orally, but it is wise for you to write a letter so that the record is maintained.

Table of Contents

Credit Application Letter Writing Tips

  • As it is a formal letter, it has to be simple, precise and easy to understand.
  • The content of the letter should be straightforward and short. But at the same time, it should contain all the necessary information.
  • The letter must be clear, understandable and to the point.
  • The language used must be formal and convincing enough.

Credit Application Letter Template

Use our free Credit Application Letter to help you get started.

______________ (Your name)

______________ (Your address)

Date: __________ (date of writing letter)

__________ (customer’s name)

__________ (customer’s address)

Dear Mr. /Ms__________ (name of the concerned person),

We are happy to know that you are interested in the company and we work hard to serve the best to our customers. You have been one of the most valuable clients of our business.

We have attached a credit application form with this email so that we know what our customers like and dislike about our services. The information that we need from you is private, so we make certain to keep the details protected.

(Mention the reasons why you want them to fill the credit application form)

(Mention how will it help them and the company)

Kindly fill the form and send back to us. We will provide you the third-day payment term after the approval of the form.

Thanks and regards,

……………………….(name and designation)

Sample Letter

From,
Rajesh Koothrapalli,
45 Winston Place,
Tower Drive,
Hyderabad

45, Highrise Towers,

Subject: Credit Application letter

We are glad that you have an interest in our company for business purpose and we strive to serve our customers to the best of our interests. We recognize the fact that you have been a valuable customer for our company for the past several years.

We request our customers to give a credit application so that we can offer our products at competitive and reasonable prices. We are aware of the fact that the information we request is sensitive. However please understand that we seek the same information from all our customers so that we can protect you from making payment of higher prices because of other persons’ bad credit.

We request you to fill up the enclosed application form and send it back to us at the earliest. We can offer you a thirty-day payment term after approval.

Looking for a favorable response,

Email Format

Below is an email format of a Credit Application Letter.

To: [email protected]
From: [email protected]

Dear Mr. /Ms__________ (name of the concerned person),

We are happy that you have a business interest in our company and we always strive to serve our customers to the best of our abilities. You have been one of our valued customers all these years.

We are seeking a credit application form from our clients so that we can offer them our goods at competitive and reasonable prices. Though we are aware of the fact that the information we want is sensitive, we give you an assurance that the same information is sought from all the customers so that we can give protection to you from making payment of higher prices because of the fault of other clients’ bad credit.

We have enclosed a credit application letter along with this letter. Please fill in the details at the earliest and send it to us. After we receive the letter from you, we can give you a thirty-day payment term after approval.

On This Page, You can easily know about How To Fill Out A Credit Application.

Filling out an application is comparatively simple. Most applications invite equivalent information with the goal of determining whether you’re financially stable and responsible. Always read the terms and conditions before applying and go searching for the simplest offer.

Table of Contents

Credit Applications Explained

Credit application processes are increasingly becoming faster and more automated as new financial technology systems emerge within the credit market. Technology allows lenders to supply borrowers varying sorts of credit applications, which will be done either face to face or individually. Regulation Z governs the disclosures provided in credit applications for borrowers and provides for consistency across all kinds of loans.

Application Information

In all sorts of credit applications, the knowledge requested is usually an equivalent. A lending decision are going to be supported a tough credit inquiry that gives details on a borrower’s credit score and credit history.

In addition to credit scoring, lenders also base loan decisions on a borrower’s debt to income. Mainstream lenders will typically search for a credit score of 650 or higher with a debt to income ratio of 35% or less. Each individual lender, however, will have their own standards for credit underwriting and credit approval.

Completing the appliance

Review the credit agreement before completing or signing the appliance. The credit agreement is typically found within the last section of the appliance. It outlines the terms and conditions to the buyer as needed by the Federal Law Consumer Disclosure Act and explains the binding agreement between you and therefore the issuer.

  • Concentrate to the APR (annual percentage rate) and therefore the late charge penalties (i.e. the quantity you pay if you create a late payment).
  • If you’re unsure about any of the terms or have any questions, contact the cardboard issuer before you begin filling out the appliance.

Choosing the proper Card

Determine your needs. There are 3 major sorts of credit cards. They’re cards that assist you build or repair your credit, cards that economize on interest, and cards that provide you rewards. The simplest card for you depends on your current needs.

  • If you’re trying to create your credit, you are doing not got to apply for a card that gives cashback or travel rewards. Apply for a secured card or a student Mastercard (if it applies to you).
  • To save lots of money on interest, search for a coffee interest, 0% APR, or a balance transfer card.
  • If you propose to pay off your balance fully monthly, you’ll need a rewards card. These cards have a better APR rate, but have many benefits.

Compare your final choices

You’ll find two or three cards that meet your needs. Examine each card for differences. NerdWallet features a tool that allows you to do side-by-side comparisons of various cards. Things that you simply should look depend upon the sort of card you have:

As a commercial collection agency, the primary way AG Adjustments (AGA) helps our clients is through the collection of their seriously delinquent debt. One of the ways that our clients can aid in our collection efforts is by having their customers fill out a credit application that provides measures of protection and will increase the ultimate collectability of an account. We cannot emphasize enough how many times we have been successful in the recovery of our client past due monies because of their proactive approach in obtaining a well-drawn up credit application.

As a company working in the B2B space the credit application is one of the primary tools available for controlling credit risk when extending credit to your customers and protecting your company. A credit application is a contract between the seller and the buyer. A good credit application will benefit the seller, a bad one the buyer. Therefore, it is important that your company be certain that your credit application, whether electronic or in paper form, contains all the safeguards and guarantees available to reduce customer risk. Securing a credit application, while certainly does not guarantee payment, is one of the more significant documents you can obtain in assisting in not only the credit decision but the ultimate collectability of your past due accounts receivable and collection fees. The adage that “the sale is not complete until the money is in the bank’ is as true today as ever. A good credit application will assist in getting your company to that point.

What Do You Need to Know to Control Credit Risk?

The credit application is your first step in gathering information about your potential customer. The more you know about them, the better off you are and the easier it will be to make a good decision and collect the necessary information to determine how much credit to extend them. You can never assume all the information on the application is correct and you will need to do your due diligence to help you verify the information provided you before you grant credit. Therefore, it is important that the sales department make sure that every customer fills out and signs the credit application prior to any goods or services being delivered.

A typical credit application requires that at least the following information be provided:
• Name and address of the applicant
• Name and address of any parent company
• All contact information: I e: phone #’s, e-mail addresses etc.
• Type of entity (i.e., corporation, partnership, proprietorship, etc.)
• Names of principals/directors/officers
• Bank references
• Trade references -at least three
• Tax ID and DUNS number
• Availability of financial statements
• Credit limit requested
• Applicant’s agreement to payment terms
• Applicant’s agreement to interest on past-due amounts
• Applicant’s agreement to pay for legal and collection costs
• Applicant’s personal guaranty(s) with spouses if possible and authorization to pull personal credit report with SS#.
• Right to verify data on application from external sources (banks, trade references, credit bureaus, etc.)
• Signer(s) is an officer or authorized to bind the buyer

The Most Important Things to Consider

A credit application serves two purposes: It is a data gathering tool and it is a contract. As a contract, it specifies the rights and obligations of both the customer and creditor. As you are writing the application bear in mind that it’s a request for credit to be extended and should be written so that it provides your company an advantage if your business relationship fails. As we all know and “credit is not a right but a privilege”. The most important things to consider are:
• The signer(s) must be able to legally bind the company. If the signer is not authorized to accept the terms and conditions of the credit application, they can’t sign the application.
• If possible, make a personal guarantee part of your credit application. We would recommend that when extending credit to SMB’s that you get the owners and their spouses to sign a personal guarantee. While many personal guarantees have no value, it’s better to have one than to not and if a SMB owner is not willing to sign a personal guarantee, that might tell you something as well. You also want the social security number of the individual signing the personal guarantee so that if you must enforce it, you will have an easier time tracking them down in the event they abscond.
• You want a stipulation that the customer will pay interest on past-due amounts and will pay any collection, legal fees and court costs that are incurred because of non-payment. If you do not have this detailed in your credit application, you will NOT be able to collect fees on your debt if placed with a collection agency. In the event of litigation, it is up to the local courts jurisdiction if collection fees, attorney fees and interest will be awarded
• You want assurance that only the disputed portion of a past due amount will be withheld.
• If you file suit over non-payment, you want it to be as convenient as possible. The choice of venue must be yours. While many creditors will request suit in their local jurisdiction, this is not necessarily in a creditors best interest. The customer’s assets are normally local to their whereabouts. Therefore, in the event post judgment remedies are needed the judgment must be recorded in a debtor’s local jurisdiction to attach assets.
• You want authorization to obtain information from credit bureaus, banks and trade references both before authorizing credit and ongoing once they are a customer.
• You want current financials and the ability to obtain financials in the future once they are a customer

Verifying the Credit Application

Once you have the credit application in hand you need to verify the information it contains. At least three trade creditor references should be contacted as well as their banks to verify the existence of their checking account. You should be sure that all their references are legitimate. If for some reason you can’t contact one – be sure at least that they exist. Any false information on the credit application is a valid reason for not doing business. If the buyer is looking for a substantial credit line, make sure you review their financials, especially a statement of cash flow. If they are operating in a negative cash position you need to be sure that they will have enough cash available to pay you. Limit their credit line or at the very least change their terms if it looks that they may have a cash flow problem.

Once They Are a Customer

Periodic credit reviews are a necessity. Major account defaults can come from existing long-term customers as well as the new ones. Customer credit limits should be reviewed periodically, at a minimum once a year. Get current financials from your accounts annually if possible. Make sure their cash position can support their business. Additionally, obtaining current credit bureau reports on your largest customers, annually, is a good idea. Stay on top of your accounts receivable aging. If a customer is always 60 to 90 days past-due on some part of their balance, they are only one period away from being a problem.

One of the little ironies in life is that as people attempt to cut down on paperwork using available technology and claims on ‘paperless office’ are made, you still have quite a bit of paperwork to tackle when applying for credit. Another fact is that the more complex a financial product is, the longer the credit application! Ironies aside, filling out a credit application is serious business and proper care needs to be taken to ensure all details are filled out clearly and legibly. This article tells you how…

Some credit applications can be filled online, such as those for simple products such as credit cards, personal loans or payday loans, etc; but a credit application for housing or business loans, line of credit, etc still need to be completed in real-time. A credit application is usually divided into several sections and each of these sections is discussed separately.

  1. Fill all fields provided in the application form, even if the information required is mentioned as non-mandatory. The more information you provide, the easier it is to get a credit approval.
  2. Ensure all information provided is true and supported by documentary evidence wherever applicable.
  3. Information provided is the latest, updated information.
  4. If certain fields are unclear, get them clarified before filling out any information.
  5. Unless otherwise specified, fill all fields in bold, capital letters.

This section will have the following fields: (i) Full name, including first and last names, middle name or initials; (ii) date and place of birth; (iii) name of father or spouse; (iv) current residential address with zip code; (v) permanent residential address (if different from the current address); (vi) telephone numbers – landline and mobile, home fax (if available); (vii) personal email address; (viii) highest educational qualifications; (ix) number of dependants; (x) type of residence and whether it is owned, leased or rented; (xi) number of years at current residence; (xii) details of identifying proof – driver’s license, passport or social security number and validity where available.

This section covers the following information: (i) Salaried or self-employed; (ii) name of the company/business; (iii) present designation/title; (iv) full address of the company/business with zip code; (v) telephone and fax numbers with extension, if any; (vi) official email address, if available; (vii) number of years at current employment; (viii) previous employment/business details (if current employment period is less than two years); (ix) declared income; (x) industry, segment or type of business.

This section will usually have the following fields: (i) details of bank account – type, bank/institution where account is held, number of years and account number, debit card details; (ii) details of other financial products such as credit cards, loans, etc – account numbers, lending institution/bank, expiry dates on credit cards, credit limits or loan amounts and loan tenure.

References – names and contact details of people who are not immediate family; if a co-signer is required, full details of such person, documents provided, signature(s) date and place of signing the credit application, are some of the other details to be filled in a credit application.

While filling a credit application is often quite simple, you should ensure adequate care and caution is taken in filling out all the details as discussed here.

A credit application is a request for an extension of credit. Credit applications can be done either orally or in written form, usually through an electronic system. Whether done in person or individually, the application must legally contain all pertinent information relating to the cost of the credit for the borrower, including the annual percentage yield (APY) and all associated fees.

Key Takeaways

  • A credit application is a form used by potential borrowers to get approval for credit from lenders.
  • Today, many credit applications are filled out electronically and may be improved in only a short amount of time.
  • The information provided on credit applications is regulated, and laws such as the Truth in Lending Act provide consumer protection and transparency.

Credit Applications Explained

Credit application processes are increasingly becoming faster and more automated as new financial technology systems emerge in the credit market. Technology allows lenders to offer borrowers varying types of credit applications that can be done either in person or individually. Regulation Z governs the disclosures provided in credit applications for borrowers and provides for consistency across all types of loans.

Technology also allows borrowers to complete a credit application completely on their own through an online application. Credit card applications are typically processed through an online credit application often providing the borrower with immediate approval.

Banks and emerging fintech companies have also increased the online lending options available for borrowers. LendingClub and Prosper, are two of the largest online peer-to-peer lenders in the U.S. offering loans to borrowers through a fully automated credit application that requires no in-person interaction. Banks have also followed this trend adding many new online lending services for both consumers and businesses.

Credit Application Processes

Consumers and businesses have a growing number of providers to choose from when seeking credit. Beyond just traditional lenders and credit cards, borrowers also have the option to choose from many emerging fintech companies offering varying types of loans.

For borrowers who seek more personal interaction, traditional bank lenders offer branches across the nation with customer service representatives available to help borrowers in the lending process. Some banks even offer telecommuting services for discussing loans and completing a loan application over the phone. This type of service is part of the traditional bank model that includes more personal interaction in banking services.

Typical loans that borrowers may seek to apply for in-person can include bank lines of credit, mortgage loans, and home equity loans.

Credit Application Information

In all types of credit applications, the information requested is typically the same. A lending decision will be based on a hard credit inquiry that provides details on a borrower’s credit score and credit history.

In addition to credit scoring, lenders also base loan decisions on a borrower’s debt to income. Mainstream lenders will typically look for a credit score of 650 or higher with a debt to income ratio of 35% or less. Each individual lender, however, will have their own standards for credit underwriting and credit approval.

Credit Applications Explained in Less Than 4 Minutes

How to fill out a credit application

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Jamie Johnson is a sought-after personal finance writer with bylines on prestigious personal finance sites such as Quicken Loans, Credit Karma, and The Balance. Over the past five years, she’s devoted more than 10,000 hours of research and writing to topics like mortgages, loans, and small business lending.

A credit application is a form a borrower fills out to request credit. The form can usually be submitted either online or in person.

The lender issues the form, and the information included in it helps the lender determine whether that borrower is a good candidate for a loan. Your lender will either deny or approve your credit application based on this information.

Definition and Examples of a Credit Application

A credit application is filled out by a borrower and submitted to a lender to request a loan or other financing. A contractual relationship begins between the borrower and that lender when the lender receives a credit application.

The application provides the lender with important information about the borrower. Applicants will typically be asked to include the following information on a credit application:

  • Address
  • Phone number
  • Social Security number
  • Employer identification number (EIN) for business loans
  • Credit references

The information provided on the credit application will make it easy for the lender to send the customer to collections or pursue legal action if the loan is granted and the borrower defaults on payment.

Lenders often ask for credit references when a consumer or business applies for a loan. These references help the lender determine whether the borrower has a history of repaying their debts.

How a Credit Application Works

You’ll start the process of applying for credit or a loan by filling out the credit application and providing all the necessary information. Your lender will then most likely pull your credit report, and it will look at factors like your income and debt-to-income ratio, as well.

The exact underwriting requirements will depend on your lender. Underwriting is the process by which the lender determines whether it wants to extend credit. Your lender will use the information provided in the credit application to determine whether you’re a good candidate for a loan.

Filling out a credit application is easier than ever thanks to an abundance of online lenders. Technology often makes it possible for borrowers to fill out the application entirely online, and they can find out whether they’re approved within minutes.

If you're denied a loan, the lender must send you a letter explaining the reason why. All lenders are required to either provide a specific reason for the rejection or let you know that you have the right to request this information within 60 days.

The lender must inform you, as well, if it rejects your application due to the information contained in your credit report. It must give you the name, address, and phone number of the credit reporting agency that supplied the report.

Types of Credit

Most borrowers apply for two primary types of credit. Each can be a good option depending on your needs and your financial situation.

Revolving Credit

Revolving credit is an ongoing type of account, like a credit card or a line of credit. You’ll receive a lump sum of money when you take out a loan, and you’ll make payments until the balance is reduced to zero. You can repeatedly use and pay down the credit line over time with a revolving line of credit.

Your lender will set a credit limit when you're approved for a credit card. This is the maximum amount of money you can charge to the card. Your credit card will remain in good standing as long as you stay below the limit and continue making payments.

It’s easy to let a revolving line of credit spin out of control if you're not careful. If you’re able, always pay more than the minimum balance and make all your payments on time.

Installment Credit

Installment credit is a close-ended credit account that you repay in monthly installments. You’ll either receive the money upfront or the funds will be applied toward an item you’re purchasing. The account is closed when you’ve finished repaying the installment loan.

Mortgages, car loans, student loans, and personal loans are all popular types of installment loans. They appeal to many borrowers because of the predictable payment terms and the option to refinance.

Try to improve your credit score as much as possible if you’re considering applying for an installment loan. A good credit score will help you earn the best rates and repayment terms on the loan.

How to fill out a credit application

Sometimes, you need to apply to the bank to get some loan or money for certain purposes. It is possible only if you are aware of the right way to access the bank for the stated reason. You can do so if you are capable enough of filling out the credit application form accurately. This is a specific form which is based on the notion of making the flow of credit easy for the recipient and the bank.

What is necessary to add in the form?

You need to give your personal details to the bank to let them know about your financial condition. You have to state it to them why you need the funds and what will you do so that credit is transferred to you. There could be many reasons for applying for the credit like using funds for business purposes or fulfilling some other priority of yours. You also will have to give thorough information regarding your employment which might include your employment history.

How to Make Best Use of Credit Application Form?

The best way is to fill the form with as many details you can provide to the bank. The easiest way to fill out the form is to be clear of the purpose for which you might need credit for. After having sufficient clarity of the purpose, you will be able to better fill it and then expect good results. Ultimately, do not forget to double check the details as inaccurate information could be disastrous.

Preview and Details of Template

How to fill out a credit application

Credit Application Form Template
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Different companies use the credit application form to get the details about the credit of the company. Many companies, as well as individuals, believe in extending the credits of their customers to make the order-placing process easier for them. When you provide credit plan to your customers to extend the credits, you are more likely to expand your business and increase sales.

By extending the credits for your customers, you allow your customers to buy your products today and pay the amount later. In this way, you will never lose the customers who don’t buy your products because of not having enough credit.

In order to make it easier for your customers to apply for the credits, many organisations provide them with the credit application form that they can fill and apply for the credit easily.

Credit application form template:

Here you can download the credit application form template free of cost. It should be kept in mind that you always need to be vigilant enough before you make decision regarding whether to extend the credit or not since it comes with a lot of risks.

The template enables a business to make right decisions. Moreover, also make sure that you have checked the credit history of your customer well before extending the credit. Since the template is available in readymade format, it saves your time and energies. In this way, it enables you to focus on your business.

Why there is a need to use the credit application form?

Sometimes, it becomes a very complex process to handle the credit applications especially when there are multiple applications to deal with. The use of readymade credit application form template makes it easier for the business to obtain the required details from the customers.

Moreover, the risks associated with extending credits are also minimized. If you are running a big business, creating credit application forms and handing them can be a troublesome task. The use of credit application form template simplifies the process of creating and managing the credit application form.

How to fill out a credit application

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Filling out a credit application accurately can often be the difference between getting approved for a loan or purchase and not. The key is to provide as much information as possible to allow the most thorough check of your credit history. Here are some tips on how to properly fill out a credit application and ensure that the next time you are using credit to purchase an item or to secure a loan, the process won’t be delayed because of your application.

Be thorough when providing personal information. Don’t skip any of the steps or questions. Even the most seemingly trivial information can be vital to a potential lender or creditor. It is actually better to provide too much information than too little—so err on the side of caution and answer every question as thoroughly as possible.

Double check to make sure all of the information you provide is accurate. One of the most common reasons that a credit application is denied, other than credit history, is inaccurate information that doesn’t match up with what is found on the person’s official credit report. Because of this, it is extremely important to answer all questions on the credit application as truthfully as possible. Ensure that the information you are providing is the most up-to-date available, including phone numbers, addresses, and places of employment.

Ask questions if there are items on the application you don’t understand. It is much better to clarify questions versus providing the wrong types of answers. When answering questions about work history, you may wonder how much history to provide, whether or not to disclose starting or ending salary or both, number of addresses you have had over the last five years. If you are unsure about how much to disclose, ask the creditor giving you the application to clarify exactly how much—and how extensive—the information you provide should be.

If you aren’t sure about something, ask to take the credit application with you. Sometimes, it can be difficult to clearly think about what you are writing down on a credit application. After all, you are usually working with the lender or retailer and it the situation may be wrought with pressure as they watch you fill out your application. In this situation, you may be more likely to write down incorrect or incomplete information. You can ask to take the application with you so you can take your time in the comfort of your own home. You can look over all of the information you provide and make any necessary additions/corrections. Ask to return the credit application the following day so you are sure you filled it out properly.

Lynda Moultry Belcher is a writer, editor and public relations professional. She worked for a daily newspaper for 10 years and has been a freelance writer for more than 15 years. She has contributed to Divorce360 and Revolution Health Group, among other publications. She is also the author of "101 Plus-Size Women's Clothing Tips" and writes "Style At Any Size," a bi-weekly newspaper column.