Business of all kinds for their healthy growth and sustenance depend on credit. Credit promotes sales, keeps money in circulation, expands like a magic circle providing regular and guaranteed income. But all the advantages will turn into disadvantages owing to bad debts and delays. Business houses, financiers and banks depend on a sound credit policy for success. But credit policy itself depends on the soundness of the credit standing of the borrowers – be it companies or individuals. The organization should write letters to enquire into die credit status of its customers before allowing credit. Credit depends on the credibility of the person / company which takes credit. These enquiry letters should be discreet, tactful and cull out information on conduct and character of the person, credibility of the business house, the capital in their possession and turnover and conditions of the business.