The Evolution of the Credit Department

Hi,
Credit departments have changed dramatically over the last thirty five years. In the past, credit department employees checked and assessed all aspects of credit requests and dealt with each request on an individual basis. The result of this hands on approach was that credit was only extended to people who could genuinely afford it. As a result, the number of delinquencies, charge-offs and repossessions was very low. Due to the human verification process, it was rare that information on credit applications was falsified. Computer technology redefined how credit departments work and how credit is granted. By using computers to compile statistical data, creditors have established various formulas with which to generically grant credit. These actions have caused a multitude of problems in the credit field. It has allowed unscrupulous borrowers to obtain credit that they can ill afford and in some cases, have no intention to repay. One of the other negative effects of this generic approach to credit is that many times people unknowingly obtain more credit than they can afford to repay, and which in some instances results in financial chaos. To cover the cost of these indiscretions, the credit industry has used higher interests, finance charges, late fees, etc., Tomorrow I will talk about various structures of credit departments.
Until then,
Alan