---
title: "Credit policy: definition | Rex glossary"
description: "Written rules for granting credit: who qualifies, how limits and terms are set, who can approve exceptions and when accounts are escalated."
canonical: https://www.rex.inc/glossary/credit-policy
---

# Credit policy

Written rules for granting credit: who qualifies, how limits and terms are set, who can approve exceptions and when accounts are escalated.

A credit policy turns judgment calls into consistent decisions. It typically covers credit applications, risk scoring, limits, payment terms, holds, collections escalation and write-off approvals.

It's also a control. Auditors look for one, and it gives sales and finance a shared reference when a large deal needs non-standard terms.

## Further reading

- [How to write a credit policy that prevents bad debt→](https://www.rex.inc/resources/guides/how-to-write-a-credit-policy)

## Related terms

- [Credit limit The maximum outstanding balance a business lets a customer carry before new orders are held or reviewed.](https://www.rex.inc/glossary/credit-limit)
- [Credit hold A block on new orders or shipments for a customer who's over their credit limit or seriously past due, until the balance is paid or the order is approved.](https://www.rex.inc/glossary/credit-hold)
- [Payment terms (Net 30) The agreed conditions for paying an invoice. Net 30, for example, means the full amount is due 30 days after the invoice date.](https://www.rex.inc/resources/glossary/payment-terms-net-30)
- [Write-off Removing an invoice balance from accounts receivable because it won't be collected, charging it to bad debt expense or the allowance for doubtful accounts.](https://www.rex.inc/glossary/write-off)

Next step

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