Credit protection

Credit protection refers to all the actions that a creditor/lender takes to secure their credit/loan.

All credit and loans have an inherent risk of non-repayment - which can be due to the debtor/borrower's bankruptcy, death or worsening financial situation.

Credit protection helps to minimize or completely avoid the potential loss that can be incurred by granting credit. In other words, credit protection helps reduce the creditor/bank's risk, enabling a loan or credit that might not have been possible without credit protection.

Traditional credit security is, for example, a mortgage on the debtor's assets, property and chattels. There is also the option of a guarantor guarantee, loss guarantee or counter guarantee.

The topic of credit protection is very extensive, and in this article we will only go through the most common types of credit protection. If you want to know more about credit protection, there is a wide range of literature on the subject, including publications from Karnov, Djøf and ASPIRI.

Who does credit protection?

In Denmark, it is mainly banks, credit institutions and other lenders that provide credit protection, where, for example, a mortgage is taken out on movable or immovable property as security for a loan or credit.

In addition, surety is also often used by banks, for example in limited liability companies where the company's owners guarantee loans and credits.

In Denmark, there is no tradition of companies securing credit in the form of pledges and the like when granting credit for, for example, the purchase of goods.

Credit protection for companies with credit

Many Danish companies provide credit for the purchase of goods and services, but do not provide traditional credit protection as banks and other lenders do.

In contrast, many companies' credit protection consists of assessing credit and gaining a satisfactory insight into the customer's finances in order to create the best framework for credit - including credit time and credit length.

Dermed kan en god kreditvurdering med den rette kredittid og kreditlængde resultere i, at virksomheden får strikket de rette vilkår sammen for en kredit til en kunde.

Get help with your credit protection with Qatchr

Qatchr er et online værktøj til kredittjek af privatpersoner og virksomheder.

With Qatchr, you get an online solution that makes it possible to gain insight into your customers' finances and financial situation - and thus be able to credit-proof your customers to a higher degree than without relevant data.

Contact us today for a free, no-obligation demo of the solution.