What Is a Credit Letter?
A credit letter is a document that aims to settle a dispute, reach an agreement, deny an application, and hand in an approval or a refusal to a transaction. Customers usually get this after having an initial transaction with a bank.
How to Write a Credit Letter
The Federal Reserve said that in 2019, the total of credit debt reached $4.15 trillion dollars. This is a huge number banks have to deal with. If you need to write a letter to handle a credit transaction, we have a few tips below that you can refer to.
1. Be Mindful of the Tone
You have to keep a polite and formal tone in any circumstance that you're writing this letter. Maintain a straightforward language when delivering the news to the client. Do not use derogatory terms and start your letter by writing about the current status of the transaction.
2. Explain Your Decision
Provide an explanation to your decision about the credit transaction of the customer. Use simple words and refer to your operating procedures if necessary. You can also tell the customer to refer to the additional documents that you've provided to understand your decision.
3. Offer Alternatives
To keep customers from going to another bank, you need to offer another alternative for their transaction to be completed. Make them see how the alternative can give them more benefit than harm. Walk them through the process of availing your other services.
4. Encourage a Response
End your letter by saying that you're open for inquiries and putting your contact information on the last paragraph of the simple letter.
What are the purposes of a credit letter?
Credit letter allows you to do the following:
1. Apply for a credit card.
2. Apply for a loan.
3. Deliver payment to creditor.
4. Give other payment methods.
5. Request a customer to pay his bills.
6. To correct wrong credit information.
7. Announce intention to collect payment.
Should you uphold confidentiality in the credit letter?
Yes, you should assure your client that any information stated in the credit letter remains confidential. Money is a serious matter to handle. It pays to be careful, especially now that people can steal money from bank accounts without your knowledge.
Why is it important to keep a polite tone in writing a letter?
It's important to keep a polite tone in writing a letter because you're still carrying out a business transaction. You have to be confident and persuasive with your words as well. You can't make a client pay his dues if the tone of your letter is not convincing enough.
Do credit letters maintain the trust of the client?
Yes, credit letters keep the trust of the client to the bank. This means that the bank cares a lot for its customers.
Is there a lot of paperwork in settling a credit dispute?
Yes, there's a lot of paperwork when you settle a credit dispute. It's a formal way of notifying clients and appealing to the bank to extend payment.