Why are credit applications rejected?

An application is rarely turned down for a single reason. In most cases, there are several weak areas in the company's financial profile, with one standing out prominently. The real issue is that this is usually discovered only after the decision arrives.

Common reasons

• Constrained liquidity: short-term obligations outpacing the company's cash generation.
• Heavy debt burden: debt remaining high relative to the company's carrying capacity.
• A large portion of existing credit limits already being drawn down.
• Declining profitability: profit failing to keep pace with revenue growth.
• A volatile track record: inconsistent performance from year to year.
• Missing or inconsistent financial data.

Rejection is rarely a surprise

All of the points above can be identified before applying. When you know your company's score and the factors dragging it down in advance, an adverse outcome ceases to be a surprise and becomes a manageable preparation issue.

What to do after a rejection?

The initial reaction is often to apply elsewhere immediately. However, a second application made with the same financial picture typically yields the same result. A more practical sequence is this: find out which factor pulled down the score, make adjustments specifically for that area, then re-assess your company and confirm that the change is reflected.

Check before applying

Checking your score before applying is a low-cost preparation. The Firmaskor Credit Score report names the area pulling the result down. You make the adjustment before you apply, then measure your company again and see the change reflected in the result.

You can apply the same assessment to the other side: with Firmaskor Company Check, you can see a customer’s or supplier’s solvency and debt burden before you sell on payment terms.