Question

Evaluate the role of credit worthiness in strategic success. How does this play a role and why is this an important concept in today’s market? What are ways that credit worthiness can be enhanced by competent strategic financial management? How does the credit worthiness of individual leaders impact the overall organization?

Answer 1

Ans. Credit worthiness is nothing but check how worthy you are to receive a new credit. It plays a very important role in your strategic success as the more creditworthy you are its better for you in the long run because it normally means better interest rates, fewer fees, and better terms and conditions on a credit card or loan, which means more money in your pocket.

It also affects your employment eligibility, insurance premiums, business funding and professional certificates and licences.

It is the crucial part of today's business, it is a lifeline of running successfull business. Allowing payment on credit and paying in advance to your vendors are some of the usual ways of doing business. Any kind of credit be it loans from bank or

Some financial institutions, no one lends without making sure your ability to pay back and pay promptly. It is important to verify that the person you are lending your payment with are capable to fullfill their part lf the contract, therefore, creditworthiness is an important aspect of doing businesses.

There are many ways in which you can enhance or keep a check on your credit worthiness. Firstly , make sure you pay your bills on time. Secondly, pay down your credit card balances and keep your credit utilisation low. Thirdly, dont close the old credit card accounts and do not apply for too many new ones. Fourthly, pay your premiums on time etc.

Credit worthiness of a leader affects the whole organization as when you as a leader say you are the director the company and you apply loan for any reason say to expand your business or you apply for loan against property of your business then as a director of the company your credit worthiness is checked by the credit managers before the sanctioning of loans because you are the sole responsible for paying back that loan. Therefore the bank first check your credit worthiness before furthering the process of loan.