The term ‘Credit standard’s is basic yardstick of making credit sales to the customers. On the basis of credit standard it is determined to whom goods are to be sold or not to be sold. The credit standards followed by a firm affect sales, profits, investment in receivable & costs. If a firm follow loose credit standards, its sales and receivables will be more as standards, its sales and receivables will be more as compared, to firm which uses tight credit standards.