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How much do you need to explain when denying credit?

Dear Thea,

I recently turned down a customer for a credit account with my company. They were not happy and demanded to know why. I told them based on their credit report we were unable to extend credit at this time, thinking I was being nice. The customer flipped and demanded to know who said bad things about them on the report, where did we get it, and that it was all lies and we needed to provide documentation that shows bad credit reported.

— Trying to let them down easy

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Dear Easy Downer,

Accountability feels like an attack when someone is not ready to acknowledge how theirThea Dudley credit actions—good or bad—impact them. You didn’t mention how you responded to that attack, so let me remind you that you did not create their credit history. This is their legacy, not a story you put together.

People often confuse the rules of B2B credit, which is governed completely differently than consumer credit. As a creditor in B2B, you don’t have to share your sources. The customer does not have the right to demand a copy of the credit report(s) you pulled or communicate directly with your reporting agency. You do not have to share it.

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If you like a challenge (and what credit manager doesn’t) see if you can get the customer to calm down long enough to have a conversation that goes beyond, “Your credit report looks like something my cat threw up.”

Start with, “I have a few concerns; can we talk about them?” Ask them about what you are seeing that is causing you concern such as tax liens, judgments, or any other item that catches your eye. I have told customers before that it appears from their credit report they pay trade creditors 40 days past terms—what’s that about? There are no names, only categories, so you have autonomy.

I encourage them to request a copy of their commercial credit report. Same as monitoring your personal credit report for mistakes, your current score, and assorted other data, a company should be doing the same thing. D&B, Credit Safe, Experian Business, and Equifax Business will all provide a company with one yearly report. They will even monitor it for you and alert you if a report is pulled on your company. Some are free while some cost, but the tools are available.

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On occasion, if the customer is professional (as in non-abusive) I will send them a copy, review it with them, and offer to help them get information corrected. We are, after all, salespeople at heart with trust issues. I want to find a way to say “yes” as much as anyone.

Most companies know if they have shoddy credit. The louder they protest, yell and threaten, the worse their credit usually is. Stereotypes exist for a reason and this is no different. If they truly don’t agree with your decision, they usually will have a conversation and want to know more without doing the “quién es más macho” (literally, “who is the toughest?”) dance.

We all want something. Customers want a line of credit to help support their business. Sales people want to make the customer happy and get the sale. Credit managers want to make the sales person and customer successful, get the sale, and get paid. We may not create their story, but we can help them navigate it and improve it, if they let us.


With more than 30 years of credit management experience in the LBM industry, Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact Thea at

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