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A credit management system is a system for handling credit accounts, from assessing risk and determining how much credit to offer to sending out bills to collect payments. Credit management systems are available through a number of companies, and they can also be designed for specific applications. Custom software may be necessary in cases where a system needs to communicate with a financial institution's existing computer network, or in other situations.
The credit management system provides connection to credit scores and other measures of financial risk. This can be important for assessing new applications for credit, as well as adjusting accounts in response to changing financial risk. The system may automatically increase interest rates and other expenses associated with an account if the person starts to default on other debt, for example, or if someone is carrying an unusually high level of debt. These changes reduce risk for the creditor.
Credit management systems also create detailed account databases. Operators can see how much credit is being extended in total, and can look up accounts by type and other characteristics. These databases are the basis for generating bills, reports on the company's credit activities, and related materials. As people make payments and draw on their credit, they interact with the credit management system. The credit management system can do things like recording account activity instantly to adjust available credit and make other changes as needed.
There are high security requirements for a credit management system, as the system contains sensitive data about customers and their accounts. It also needs to be able to handle a very high volume of transactions without losing data or going down, as people expect instant and around the clock access to credit accounts. These demands can add challenges to the process of software development and maintenance, as software companies need to build robust systems with features like redundant storage and backup for extra safety and security. Many companies in charge of building and maintaining such systems focus exclusively on financial software.
Companies in the credit business need such systems to administer their customer accounts and control their credit risks. Individual consumers may have credit management systems of their own to help them pay and organize bills, address debt, and perform other tasks. Accounting software may have built in features allowing people to schedule payments and work on paying off debt, and people in debt can seek counseling to help them learn to manage their account more effectively.