The study was about the impact of credit policy on the financial performance of Microfinance institution in Luwero District a case study of Letshego Microfinance. The study was guided by three research objectives as follows; to determine the effect of client appraisal on financial performance in Letshego microfinance institutions in Luwero District, to establish the effect of credit risk control on financial performance in Letshego microfinance institutions in Luwero District and to determine the effect of collection policy on financial performance in Letshego microfinance institutions in Luwero District. The study used a cross sectional research design where both qualitative and quantitative methods were used to collect, present and interpret and analyze verbal data (descriptive). The study took a population of 65 respondents out of a sample size of 45 respondents; these included; loan officers, loan committee members, supervisor, and members from the business community. The study used questionnaires methods to collect data. According to the findings, the study noted that. client appraisal is mostly used in Letshego microfinance because it is a useful strategy for credit management, Letshego has competent staff who appraise clients, personality of the client is highly observed, Collateral aspects are put into consideration, loan defaults can emerge in the instances when customer’s capacity is not assessed and aappraisal of client examines the customer’s ability to fulfill his financial obligations. It was note that credit risk is controlled through imposing limits on loans, use of credit checks, flexible repayment period, penalty for late payment, use of customer credit application forms and credit committees are used for assessment of clients. This is used in Letshego microfinance however default minimal defaults tendencies still exist. Study findings indicated that the Bank has formulated collection procedures and systems, the Bank enforces guarantee policies to provide chances for loan recovery, the Bank has regular reviews on collection policies to improve the state of credit management, the Bank has maintains a credit policy manual to help in debt recovery, there is Flexible repayment duration enhances loan repayment and there is Penalty for late repayment encourages customers commitment to loan repayment. It is however can be concluded that credit policy is a very important matter in the process of financial evaluation. Regardless of these policies in the bank, there is a possibility that defaults among customer are expected to be high and contrary. It is recommended that for Letshego microfinance to effectively enhance its performance; there is need to enhance their client appraisal techniques to avoid having un-credit worthy clients leading to loan delinquency. There is need to improve the financial performance by having credits paid and having a positive performing loan portfolio in terms of recovery.