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Credit reference refers to a company or an individual with a financial connection to another company or individual. In this case connection suggests that the credit reference has precise information concerning the habits or financial state of the other company.
A person’s credit history is always affected each time an individual carries out a financial transaction. This is because; credit references are automatically added to an individual’s credit history. For instance, if a person signs up a new credit card and gets approved, the credit card company becomes the individual’s credit reference.
The importance of credit reference in today’s credit driven world is that the credit company can act as an individual’s credit reference. This will in turn help to raise the person’s credit history and score. Putting into consideration the credit company’s credibility is a vital thing that an individual has to put in mind.
An individual must consider the companies that he/ she deal with. One must make sure that the credit companies are reputable. However, an individual has to fulfill the financial obligations required by the company. The main obligation is to pay bills on time and making loan payments regularly. The credit reference companies have a significant influence on an individual’s future financial transaction. As they can either make excellent reputation or ruin the individual’s financial reputation. Another important thing an individual is supposed to do is to keep records of the transaction undertaken with the company in order for him to counter check with the credit company.
Despite the credit reference companies being of high assistance to other companies and individuals, they still have some barrier. Most of these barriers are ethical barriers when conducting business. Despite a company’s compliance policies and procedures for ethics implementation, most companies fail to consider the biases that might exist; hence, they remain blind to unethical practices in the work place.
In the case study, Kathy is faced with the dilemma whether to tell Mike or not, about the true financial situating on North company or not. She debates within herself as to the right choice to make to protect both her friend and at the same time her job. It is unethical for to disclose North’s financial status with individuals outside the company. She knows North Company is facing bankruptcy and that the company has not been painting the real picture about their financial situation. Thus, when her friend informs her of his decision to invest with North she gets torn between telling him or not.
This brings out the issue of ill conceived goals in business. This is evident when Kathy is worried about losing her bonus from North if she tells Mike the truth. On the other hand, she has to act professionally because it is against the ethics of any company to disclose client information. This is the reason why she is debating about alternative ways of telling Mike the truth without necessarily implicating herself and putting her job at risk.
Deception has become particularly common in organizations where they paint a rosy picture about the financial situation while, in the real sense, the company is collapsing. This could be as a result of over valuing outcomes or over capitalization of companies. Companies need to ensure their financial statements are in order to avoid misinterpretation by other prospect investors as this could lead to massive loss. In addition, the company can be sued for misrepresentation of the finances they have as this interferes with the tax returns they get and it may be assumed that they were cheating on paying taxes. Kathy should not disclose any client information to Mike; however, she should encourage Scott to present the true financial picture to the investors. This way, North will avoid future legal implications as well as a hoard of unhappy investors blaming them for their losses.