Businesses in deciding to extend credit to new customers try to reduce defaults by:

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In order to reduce defaults, businesses should consider all of the options listed. Determining the probability of non-payment can help them assess the risk of extending credit to a particular customer. Gathering independent credit checks can provide additional information about a customer's payment history and creditworthiness. Determining if it is profitable to extend credit can help businesses avoid extending credit to customers who are unlikely to generate enough revenue to justify the risk. Finally, identifying the less profitable customers can help businesses allocate their resources more effectively and focus on extending credit to customers who are most likely to be profitable.

Businesses in Deciding to Extend Credit to New Customers Try