There is concern that this could lead to household over-indebtedness. This means that South Africans are, on the whole, becoming less creditworthy. Knowing the early warning signs of "bad debtors" is important to the survival of any business that offers credit to its customers. When assessing the profile of a potential recipient of your credit, in addition to the usual analytical inputs (i.e. financial ratios, poor credit records etc) personality characteristics are important to be cognisant of. In fact, without taking these softer issues into account, poor credit decisions are often be made. The following are questions worth asking about a customer, prior to granting or continuing to extend credit:
Observations about personality are a very important component of any credit decision. Even in highly systematised and automated businesses (for example micro-loan businesses or furniture retailers), credit providers need to consider how they can incorporate observations about the personality characteristics into their credit decision formula and decision-making processes. This should result in more balanced and informed credit decisions being made.