Net credit loss

Net Credit Loss (NCL) refers to the total amount of losses a credit card issuer incurs from unpaid debts, after accounting for any recoveries. It’s a key metric used in financial reporting and risk management.

Breakdown of NCL:

• Gross Write-Off (GWO): Total amount of debt written off as uncollectible.
• Bankruptcy (BK): Losses due to customer bankruptcies.
• Recoveries (REC): Amount recovered from previously written-off accounts.

The formula often looks like this:

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Why It Matters:

• Helps issuers assess the credit risk of their portfolio.
• Influences decisions on interest rates, credit limits, and approval criteria.
• Used by analysts to evaluate the financial health of credit card companies.