What Is a Consumer Credit Risk?

Consumer credit management is a technical means of scientific management expertise to expand credit consumption and prevent credit risks. The main functions of consumer credit management are: customer credit survey, customer credit, account control, commercial account collection, and the use of personal credit database to promote credit payment tools. In different forms of personal credit sales, the risk factors are also different. According to different forms of credit transactions, repayment methods, and different entities issuing credit, consumer credit can be divided into retail credit, cash credit and real estate credit. Among them, retail credit can be further divided into revolving credit, installment credit and service credit.

Consumer Credit Management

Consumer Credit Management and

The functions of consumer credit management in enterprises mainly include the following aspects:

1. Improve the efficiency of credit review and reduce operations

The process of credit management is closely related to the process of marketing. Taking the entire process of a credit transaction as a unit, consumer credit management consists of customer credit, account management, and business account failure.

1. Customer credit

When consumers submit a credit application, the credit management department of an enterprise must first perform a credit review on it, and finally decide whether to grant credit and the amount according to the credit standard of the enterprise. Credit standards are internal documents of an enterprise, which uniformly stipulate the standards and conditions for granting credit in various situations. An enterprise's credit management department should express opinions on consumers' credit applications based on this standard, that is, whether to grant credit, the amount of credit, and the duration.

2. Account management

After the consumer accepts the conditions of the credit transaction, the enterprise's credit management department must open a credit account for it, and record all transaction data, repayment records and credit records. Due to the risk of arrears, the enterprise's credit management department must perform risk monitoring and credit adjustment on consumers within the credit period, and also assist the sales department to find new trading opportunities.

The risk monitoring of consumers is mainly to observe and analyze the behavior of consumers, and to judge how the credit level of consumers changes in a timely manner. If credit deterioration occurs, the enterprise's credit management department must give early warning; otherwise, it should promptly increase the consumer's credit limit or extend the contract term.

3. Business account processing

Business account processing has two parts: first, normal account recovery, that is, periodically providing consumers with bills to remind consumers to pay in time; second, collection of arrears.

After consumers use the credit services provided by the enterprise, their consumption records are entered into the billing record system. Within the prescribed time, the system will automatically print the bills periodically, and the credit management department of the enterprise will uniformly submit them to consumers, and the consumers will pay according to the requirements of the bills.

In addition to the normal repayment situation, there may be default or non-payment among customers. At this time, the enterprise's credit management department must enter the collection process in a timely manner. Collection is a gradual process, from letter collection to telephone collection, to door collection, until litigation collection.