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                                                                  Exhibit 10.18

                  FIRST AMENDMENT (this "Amendment"), dated December 13, 1996,
to AMENDED AND RESTATED CREDIT AGREEMENT (the "Credit Agreement") dated
September 5, 1996 by and among NCO GROUP, INC., NCO FINANCIAL SYSTEMS, INC., NCO
FUNDING, INC. and NCO OF NEW YORK, INC. (each individually a "Borrower" and
collectively the "Borrowers") and MELLON BANK, N.A. (the "Lender").

                  WHEREAS, on November 13, 1996, the Company completed its
initial public offering of common stock by selling 2,875,000 shares (of which
375,000 shares were sold by certain selling shareholders) at a price to the
public of $13.00 per share;

                  WHEREAS, the parties have agreed to amend the Credit Agreement
on the terms and conditions set forth below.

                  NOW, THEREFORE, intending to be legally bound, the parties
agree as follows:

                  1. Defined Terms. Capitalized terms not otherwise defined in
this Amendment will have the meanings that the Credit Agreement gives to those
terms.

                  2. Amendments to Credit Agreement. The Credit Agreement is
hereby amended as follows:

                           (A) 1.1 Certain Definitions. The following
definitions in Section 1.1 are amended and restated in their
entirety to read as follows:

         "Change of Management" shall mean that a majority of the Board of
         Directors of NCO Group shall be other than those who were directors on
         the date hereof (including for this purpose Allen F. Wise and Eric S.
         Siegel, who are expected to be appointed as directors by February 13,
         1997), or Michael J. Barrist for any reason shall cease to serve as
         chief executive officer of NCO Group; provided, however, that the
         cessation of Michael Barrist's status as chief executive officer shall
         not fall within the definition of a Change of Management so long as a
         replacement is hired within ninety (90) calendar days of such cessation
         who is reasonably acceptable to the Lender in its sole and absolute
         discretion.

         "Permitted Acquisitions" shall mean any acquisition (by way of stock
         purchase, merger, asset purchase or otherwise) by any Borrower of all
         of the properties of any going concern or going line of business;
         provided, however, that each such business being acquired by such
         Borrower must (1) have a positive EBITDA for the immediately preceding
         twelve months prior to the acquisition, after adjustments for unusual
         expense items, (2) be in the same or a similar line of business as such
         Borrower, (3) after recasting the


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         Borrowers' consolidated financial statements for the immediately
         preceding twelve month period to include the results of operations from
         the target of the acquisition, and preparing pro-forma financial
         statements for the immediately succeeding twelve month period, the
         combined Borrower and target shall have met the financial covenants
         described in Section 6.1 of this Agreement for the immediately
         preceding twelve months prior to the acquisition and on a pro-forma
         basis for the immediately following twelve month period after the
         acquisition, and (4) with respect to any merger, the Borrower shall be
         the surviving corporation; provided further, however, that the purchase
         price paid by such Borrower for the acquisition must not exceed
         $5,000,000 in any rolling twelve month period. An acquisition meeting
         these criteria does not require the Lender's consent

         "Responsible Officer" shall mean Michael J. Barrist, Charles Piola, Jr.
         or Steven L. Winokur.

         "Revolving Credit Commitment Fee" shall have the meaning set forth in
         Section 2.3(a) hereof.

         "Revolving Credit Committed Amount" shall mean Twenty-Five Million
         Dollars ($25,000,000).

         "Revolving Credit Maturity Date" shall mean four (4) years from closing
         on this Amendment.

         The definition of "Warrant Documents" is amended to include the Second
         1996 Warrant Agreement, the 1996 Warrant, and the Second Amended and
         Restated Registration Rights Agreement all of even date herewith.

         The following definitions are hereby added to Section 1.1:

         "IPO" shall mean the initial public offering by NCO Group, Inc. of
         2,875,000 shares (of which 375,000 shares were sold by certain selling
         shareholders) of common stock at a price to the public of $13.00 per
         share on November 13, 1996

         "LIBOR Based Rate" shall mean with respect to any LIBOR Based Rate Loan
         outstanding, the LIBOR Rate plus two and one-half percent (2 1/2%) per
         annum.

         "LIBOR Based Rate Loan" shall mean any Revolving Credit Loan on which
         interest accrues at the LIBOR Based Rate.

         "LIBO Rate Period" shall have the meaning set forth in Section 2.5(a)
         hereof.


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         "LIBOR Rate" shall mean the annual rate of interest determined by
         Lender as being the rate available to Lender at approximately 11:00
         a.m. London time in the London Interbank Market, as referenced by
         Reuters Screen "LIBO", in accordance with the usual practice in such
         market, for the LIBO Rate Period, in effect two Good Business Days
         prior to the funding date for a requested LIBOR Based Rate Loan, or for
         a LIBOR Based Rate Loan which Borrower has elected to continue as a
         LIBOR Based Rate Loan beyond the expiration of the then current LIBO
         Rate Period with respect thereto, for deposits of dollars in amounts
         equal (as nearly as may be estimated) to the amount of the Revolving
         Credit Loan which shall then be loaned or continued by the Lender to
         Borrower as of the time of such determination, as such rate may be
         adjusted by the reserve percentage applicable during the LIBO Rate
         Period in effect (or if more than one such percentage shall be
         applicable, the daily average of such percentages for those days in
         such LIBO Rate Period during which any such percentage shall be so
         applicable) under regulations issued from time to time by the Board of
         Governors of the Federal Reserve System (or any successor) for
         determining the maximum reserve requirement (including without
         limitation, any emergency, supplemental or other marginal reserve
         requirement) for the Lender with respect to liabilities or assets
         consisting of or including "Eurocurrency Liabilities" as such term is
         defined in Regulation D of the Board of Governors of the Federal
         Reserve System, as in effect from time to time, having a term equal to
         such LIBO Rate Period ("Eurocurrency Reserve Requirement"). Such
         adjustment shall be effectuated by calculating, and the LIBOR Rate
         shall be equal to, the quotient of (i) the offered rate divided by (ii)
         one minus the Eurocurrency Reserve Requirement.

         "Libor Based Rate Option" shall have the meaning set forth in Section
         2.5(a)(iii) hereof.

         "Prime Based Loan" shall mean any Revolving Credit Loan that accrues
         interest at the Prime Rate.

         "Prime Based Rate Option" shall have the meaning set forth in Section
         2.5 hereof.

         "S Corporation Termination Date" shall mean September 3, 1996, the date
         on which NCO Financial Systems, Inc. terminated its status as an S
         corporation

                           (B) 2.1(c) Revolving Credit Note.  Section 2.1(c)
is amended and restated in its entirety to read as follows:

         The obligation of the Borrowers to repay the unpaid principal amount of
         the Revolving Credit Loans made by the

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         Lender and to pay interest thereon shall be evidenced in part by a
         promissory note of the Borrowers, dated the date hereof (the "Revolving
         Credit Note") in substantially the form attached hereto as Exhibit A,
         with the blanks appropriately filled, payable to the order of the
         Lender in a face amount equal to $25,000,000 (the "Revolving Credit
         Committed Amount").

                           (C) 2.3(a) Revolving Credit Commitment Fee;

         The Borrowers shall pay to the Lender a commitment fee (the "Revolving
         Credit Commitment Fee") equal to three-eighths of one percent (3/8%)
         per annum (based on a year of 360 days and actual days elapsed), for
         each day from and including the date hereof to but not including the
         Revolving Credit Maturity Date, on the amount (not less than zero)
         equal to (i) the Revolving Credit Committed Amount on such day, minus
         (ii) the aggregate principal amount of the Revolving Credit Loan
         outstanding on such day. Such Revolving Credit Commitment Fee shall be
         due and payable for the preceding period for which such fee has not
         been paid: (x) on each Regular Payment Date, (y) on the date of each
         reduction of the Revolving Credit Committed Amount (whether optional or
         mandatory) on the amount so reduced and (z) on the Revolving Credit
         Maturity Date.

                           (D) 2.5 (a) Interest. Section 2.5(a) is amended
and restated in its entirety to read as follows:

         (i) Revolving Credit Interest.  Interest on outstanding
         Revolving Credit Loans shall be calculated at the Prime Based Rate
         Option or the LIBOR Based Rate Option.

         (ii) Prime Based Rate Option. All or a portion of the unpaid principal
         balance of any Revolving Credit Loan, unless subject to the LIBOR Based
         Rate Option, shall bear interest at the Prime Rate, subject to the
         terms hereof ("Prime Based Rate Option"). Changes in the Prime Rate
         shall become effective on the same day as Lender announces a change in
         its Prime Rate.

         (iii) LIBOR Based Rate Option. All or a portion of the unpaid principal
         balance of any Revolving Credit Loan may, at Borrower's option, bear
         interest at the LIBOR Based Rate ("LIBOR Based Rate Option").

         (a) LIBOR Based Rate Loans may be selected for periods of one, two, or
         three months' duration, during which the LIBOR Based Rate is applicable
         (each such period a "LIBO Rate Period"); provided, however, that (1) if
         the LIBO Rate Period would otherwise end on a day which shall not be a
         Business Day, such LIBO Rate Period shall be extended to the

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         next succeeding Business Day, unless such Business Day falls in another
         calendar month, in which case such LIBO Rate Period shall end on the
         next preceding Business Day subject to clause (3) below; (2) interest
         shall accrue from and including the first day of each LIBO Rate Period
         to, but excluding the day on which any LIBO Rate Period expires; (3)
         with respect to any LIBO Rate Period which begins on the last Business
         Day of a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such LIBO Rate
         Period), the LIBO Rate Period shall end on the last Business Day of a
         calendar month; and (4) not more than ten separate LIBOR Based Rate
         Loans may be outstanding at any one time. Subject to all of the terms
         and conditions applicable to a request that all or a portion of new
         Revolving Credit Loans or that all or a portion of the outstanding
         principal balance under a LIBOR Based Rate Loan, Borrower may extend a
         LIBOR Based Rate Loan as of the last day of the LIBO Rate Period to a
         new LIBOR Based Rate Loan or may convert all or a portion of the
         Revolving Credit Loans to the Prime Based Rate Option to a LIBOR Based
         Rate Loan. If the Borrower fails to notify the Lender of the LIBO Rate
         Period for a subsequent LIBOR Based Rate Loan at least three Business
         Days prior to the last day of the then current LIBO Rate Period of an
         outstanding LIBOR Based Rate Loan, then such outstanding LIBOR Based
         Rate Loan shall become a loan subject to the Prime Based Rate Option at
         the end of the current LIBO Rate Period for such outstanding LIBOR
         Based Rate Loan and shall accrue interest in accordance with Section
         2.5(a)(ii) above.

         (b) The LIBOR Rate may be automatically adjusted by Lender on a
         prospective basis to take into account the additional or increased cost
         of maintaining any necessary reserves for Eurodollar deposits or
         increased costs due to changes in applicable law or regulation or the
         interpretation thereof occurring subsequent to the commencement of the
         then applicable LIBO Rate Period, including but not limited to changes
         in tax laws (except changes of general applicability in corporate
         income tax laws as they affect financial institutions) and changes in
         the reserve requirements imposed by the Board of Governors of the
         Federal Reserve System (or any successor) that increase the cost to
         Lender of funding the LIBOR Based Rate Loan. Lender shall promptly give
         the Borrower notice of such a determination and adjustment, which
         determination shall be conclusive as to the correctness of the fact and
         the amount of such adjustment.

         (c) In the event that the Borrower shall have requested the LIBOR Based
         Rate Option in accordance with Section 2.5(a)(iii) and Lender shall
         have reasonably determined that Eurodollar deposits equal to the amount
         of the principal of

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         the requested LIBOR Based Rate Loan and for the LIBO Rate Period are
         unavailable, impractical or unlawful, or that the rate based on the
         LIBOR Rate will not adequately and fairly reflect the cost of the LIBOR
         Based Rate applicable to the specified LIBO Rate Period, of making or
         maintaining the principal amount of the requested LIBOR Based Rate Loan
         specified by the Borrower during the LIBO Rate Period specified, or
         that by reason of circumstances affecting Eurodollar markets, adequate
         and reasonable means do not exist for ascertaining the rate based on
         the LIBOR Rate applicable to the specified LIBO Rate Period, Lender
         shall promptly give notice of such determination to the Borrower that
         the rate based on the LIBOR Rate is not available. A determination by
         Lender hereunder shall be prima facie evidence of the correctness of
         the fact and amount of such additional costs or unavailability. Upon
         such a determination, (1) the right of Borrower to select, convert to,
         or maintain a LIBOR Based Rate Loan at the rate based on the LIBOR Rate
         shall be suspended until Lender shall have notified the Borrower that
         such conditions shall have ceased to exist, (2) Lender shall use its
         best efforts to offer to Borrower a replacement index at a rate with a
         margin that gives Lender a comparable yield to the LIBOR Based Rate
         Option, and (3) the Loans subject to the requested LIBOR Based Rate
         Option shall accrue interest in accordance with Section 2.5(a)(ii)
         above.

         (d) In the event that, as a result of any changes in applicable law or
         regulation or the interpretation thereof, it becomes unlawful for
         Lender to maintain Eurodollar liabilities sufficient to fund any LIBOR
         Based Rate Loan subject to the LIBOR Based Rate, then Lender shall
         immediately notify Borrowers thereof and Lender's obligations to make,
         convert to, or maintain a LIBOR Based Rate Loan at the LIBOR Based Rate
         shall be suspended until such time as Lender may again cause the LIBOR
         Based Rate to be applicable to any LIBOR Based Rate Loans of the
         Revolving Credit Loans subject to the LIBOR Based Rate shall accrue
         interest in accordance with Section 2.5(a)(ii) above. Promptly after
         becoming aware that it is no longer unlawful for Lender to maintain
         such Eurodollar liabilities, Lender shall notify Borrower thereof and
         such suspension shall cease to exist.

         (iv) Indemnity/Loss of Margin: Borrower shall indemnify, defend and
         hold harmless Lender against any and all loss, liability, cost or
         expense Lender may sustain or incur as a consequence of (i) any failure
         of Borrower to obtain, convert or extend any LIBOR Based Rate Loan
         after notice thereof has been given to Lender or (ii) any payment,
         prepayment, termination or conversion of a LIBOR Based Rate Loan made
         for any reason on a date other than the last day

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         of the applicable LIBO Rate Period. Borrower shall pay the full amount
         thereof to Lender, on demand by Lender.

         (v) Change in Law. In the event that any present or future law, rule,
         regulation, treaty or official directive or the interpretation or
         application thereof by any central bank, monetary authority or
         governmental authority, or the compliance with any guideline or request
         of any central bank, monetary authority or governmental authority
         (whether or not having the force of law) imposes, modifies or deems
         applicable any deposit insurance, reserve, special deposit, or other
         similar requirement with respect to deposits in or for the account of,
         or loans or advances or commitment to make loans or advances by, Lender
         and the result of any of the foregoing is to increase the costs of
         Lender, reduce the income receivable by or return on equity of Lender
         or impose any expense upon Lender with respect to any advances or
         extensions of credit or commitments to make advances or extensions of
         credit under this Agreement, Lender shall so notify Borrowers in
         writing. Upon notice from Lender, Borrowers agree to pay Lender the
         amount of such increase in cost, reduction in income, reduced return on
         equity or capital, or additional expense after presentation by Lender
         of a statement concerning such increase in cost, reduction in income,
         reduced return on equity or capital, or additional expense. Such
         statement shall set forth a brief explanation of the amount and
         Lender's calculation of the amount (in determining such amount Lender
         may use any reasonable averaging and attribution methods), which
         statement shall be conclusively deemed correct absent manifest error.

         (vi) Limitation on LIBOR Based Rate Loans during Periods of Default:
         Upon the occurrence and during the continuance of an Event of Default
         and following written notice from Lender to Borrower, Lender may in its
         sole discretion eliminate the availability of LIBOR Based Rate Loans.

         (vii) Applicable Interest Limitations: In no contingency or event
         whatsoever shall the aggregate of all amounts deemed interest hereunder
         and charged or collected pursuant to the terms of this Amendment exceed
         the highest rate permissible under any law which a court of competent
         jurisdiction shall, in a final determination, deem applicable hereto.
         In the event that such court determines Lender has charged or received
         interest hereunder in excess of the highest applicable rate, Lender
         shall in its sole discretion apply and set off such excess interest
         received by Lender against other Obligations due or to become due and
         such rate shall automatically be reduced to the maximum rate permitted
         by such law.


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                           (E) 3.4 Governmental Approvals and Filings. Section
3.4 is amended to recognize that Loan Documents may need to be filed with the
Securities and Exchange Commission.

                           (F) 5.14 Bank Accounts. Section 5.14 is amended to
provide that if Lender fails to service the Borrower's depository and
disbursement accounts in a commercially reasonable manner, Borrower may move the
accounts to another financial institution of its choice.

                           (G) 6.1(a) Consolidated Current Ratio. Section 6.1(a)
is amended and restated in its entirety to read as follows:

         The Consolidated Current Ratio shall not at any time be less than .5 to
         1.00. For purposes of determining the Consolidated Current Ratio,
         Consolidated Current Liabilities shall include all Obligations.

                           (H) 6.1(b) Consolidated Net Worth. Section 6.1(b) is
amended and restated in its entirety to read as follows:

         As of the last day of each fiscal quarter Consolidated Net Worth shall
         not at any time be less than $26,000,000 plus 90% of quarterly
         Consolidated Net Income on a cumulative basis for each quarter
         beginning with the quarter ending December 31, 1996, but without
         deductions for net losses plus the net proceeds of any offering of
         equity after the IPO. For purposes of this provision only, Consolidated
         Net Income shall be calculated after S corporation tax distributions
         and compensation dividends payable with respect to periods before the S
         Corporation Termination Date.

                           (I) 6.1(c) Funded Debt to Consolidated EBITDA.
Section 6.1(c) is amended and restated in its entirety to read as follows:

         As of the last day of each fiscal quarter, the ratio of Funded Debt to
         annualized Consolidated EBITDA shall not be more than 2.5 to 1.00.
         Consolidated EBITDA shall be annualized by multiplying Consolidated
         EBITDA for the fiscal quarter being tested by four. For purposes of
         this provision only, Stock Payments which are paid as annual
         compensation dividends pursuant to Section 6.6 hereof with respect to
         periods before the S Corporation Termination Date shall be included as
         operating expenses in the calculation of Consolidated EBITDA, but tax
         bonuses paid to shareholders in lieu of S corporation tax distributions
         with respect to periods before the S Corporation Termination Agreement
         and the Final S Corp. Distribution shall not be included as

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         operating expenses of Consolidated EBITDA. In addition, for purposes of
         this provision only, Consolidated EBITDA shall include the
         pre-acquisition EBITDA, for the immediately preceding 12 month period,
         of any company acquired by any Borrower.

                           (J) 6.1(d) Consolidated Interest Coverage Ratio.
Section 6.1(d) is amended and restated in its entirety to read as follows:

         The Consolidated Interest Coverage Ratio as of the last day of each
         fiscal quarter shall not be less than 4.00 to 1.00. For purposes of
         this provision only, Stock Payments which are paid as annual
         compensation dividends pursuant to Section 6.6 hereof with respect to
         periods before the S Corporation Termination Date shall be included as
         operating expenses in the calculation of Consolidated EBIT, but tax
         bonuses paid to shareholders in lieu of S corporation tax distributions
         with respect to periods before the S Corporation Termination Date and
         the Final S Corp. Distribution shall not be included as operating
         expenses in the calculation of Consolidated EBIT.

                           (K) 6.1(e) Net Trade Accounts Receivable Ratio.
Section 6.1(e) is amended and restated in its entirety to read as follows:

         On a consolidated basis, the ratio of the Borrowers' net trade accounts
         receivable to Obligations shall not at any time be less than .5 to
         1.00, and the Borrowers may pledge cash or cash equivalents to the
         Lender in order to maintain this ratio; provided, however, that any bad
         debts shall be accounted for in a consistent manner with the most
         recently delivered financial statements.

                           (L) 6.5 Loans, Advances and Investments. The
exceptions in Section 6.5 are amended to allow (f) Permitted Acquisitions and
(g) investments in a Borrower by another Borrower.

                           (M) 6.6(a) Dividends and Related Distributions.
Section 6.6(a) is amended to permit the payment of Stock Payments from one
Borrower to another Borrower.

                           (N) 6.6 Dividends and Related Distributions. Sections
6.6(b) and (c), which restrict compensation payable to certain officers, are
deleted for fiscal periods following the IPO.

                           (O) 6.9(v) Mergers, Acquisitions, etc. Section
6.9(v) is amended to permit mergers and consolidations that are part of
Permitted Acquisitions.

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                           (P) 6.11 Issuance of Stock. Section 6.11 is amended
and restated in its entirety to read as follows:

         No Borrower, other than NCO Group, shall issue, sell, otherwise dispose
         or suffer to remain outstanding, voluntarily or involuntarily, any
         additional shares of capital stock, or any options, warrants, calls,
         subscriptions, conversion rights, exchange rights, preemptive rights or
         other rights, agreements or arrangements (contingent or otherwise)
         which may in any circumstances now or hereafter obligate such Borrower
         to issue any shares of its capital stock, except to NCO Group or
         another Borrower.

                           (Q) 6.15 Limitations on Modification of Certain
Agreements and Instruments. Section 6.15 is amended and restated in its entirety
to read as follows:

         No Borrower shall materially amend, modify or supplement materially its
         articles of incorporation or by-laws (or similar constituent
         documents), if so doing would adversely affect the Bank's rights or
         benefits under the Loan Documents.

                           (R) 6.14 Capital Expenditures. Section 6.14 is
amended and restated in its entirety to read as follows:

         No Borrower shall make any Capital Expenditures on or after the date
         hereof, except for Capital Expenditures not in excess of $2,000,000, in
         the aggregate among all Borrowers, in any rolling four quarter period;
         provided, however, that the Borrowers may carry forward into the
         future, on a non-cumulative basis, up to $750,000 in unspent Capital
         Expenditures per rolling four quarter period. For purposes of this
         provision, (a) all leases, except for real estate leases and automobile
         leases, shall be deemed to be Capitalized Leases and therefore shall be
         accounted for as a Capital Expenditure, and (b) Purchase Money
         Indebtedness shall be accounted for as a Capital Expenditure.

                           (S) 7.1(g) Events of Default. The threshold for any
judgment or judgments in Section 7.1(g) is increased to $200,000.

                           (T) 7.1(h) Events of Default. The threshold for
attachment, garnishment, execution, distraint or similar process in Section
7.1(h) is increased to $200,000.

                           (U) 7.1(r) Events of Default. Section 7.1(r) is added
to read as follows:


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         Any person or any affiliated group of persons, other than present
         management, obtains control of a majority of the voting stock of NCO
         Group.

                           (V) 7.2 Consequences of an Event of Default. The
reference to "Section 7.01" in Section 7.2(a) is amended to refer to Section 7.1
and the reference to "subsection q or r of Section 7.1" in Section 7.2(b) is
amended to refer to subsection p or q of Section 7.1.

                           (W) 8.15 Confidential Information. Section 8.15 is
added to read as follows:

         Lender acknowledges that the reports, documents and other information
         supplied or to be supplied by Borrowers to Lender pursuant to this
         Agreement, including without limitation, the reports, documents and
         other information to be supplied pursuant to Section 3.11 and Section
         5.1 of this Agreement, are confidential (all such reports, documents
         and other information are hereinafter referred to as "Confidential
         Information"). Notwithstanding the foregoing, Confidential Information
         shall not include any reports, documents and other information which
         are, or become, generally available to the public other than as a
         result of a breach of this Section 8.15 by Lender or its respective
         directors, officers, employees, representatives, agents, affiliates or
         professional advisors. Without the prior written consent of Borrowers,
         Lender shall not disclose any Confidential Information to any Person
         other than (a) its respective directors, officers, employees,
         representatives, agents, affiliates and professional advisors and then
         only on a "need to know" basis (the "Permitted Persons") or (b) to, or
         in any filing with, any state of federal regulatory agency to which
         Lender is required to report by its charter or by statute or
         regulation. Lender shall cause all Permitted Persons to comply with all
         the terms and covenants of this Section 8.15. Lenders shall inform all
         Permitted Persons of the confidential nature of the Confidential
         Information and shall, if requested by Borrowers, obtain the written
         agreement of all Permitted Persons to be bound by and comply with the
         provisions of this Section 8.15 on the same terms and conditions as if
         specifically named a party. Without limiting the generality of the
         foregoing, Lender agrees that it shall not trade in, or make
         recommendations concerning trades in, the common stock or other
         securities of NCO Group. Lender acknowledges that any breach of this
         Section 8.15 may cause irreparable injury to Borrowers for which money
         damages could not adequately compensate. If there is such a breach,
         Borrowers shall be entitled, in addition to any other rights and
         remedies they may have at law or in equity, to have an injunction
         issued by any competent court enjoining and restraining the breaching

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         parties from continuing such breach. The existence of any claim or
         cause of action which any of the breaching parties may have against any
         of the Borrowers shall not constitute a defense or bar to the
         enforcement of this Section 8.15. Notwithstanding the foregoing, if the
         Lender is required to disclose any Confidential Information in a
         judicial, administrative or governmental proceeding, Lender will notify
         Borrowers as promptly as practicable so that Borrowers may either seek
         an appropriate protective order or relief or waive the provisions of
         this Section 8.15. If, in the absence of any such protective order,
         relief or waiver, Lender is required, in the written opinion of their
         legal counsel, to disclose Confidential Information to any court,
         governmental agency or tribunal or else stand liable for contempt or
         other penalty, Lender may disclose such Confidential Information
         without liability hereunder.

                  3. Representations and Warranties. Each Borrower hereby
represents and warrants to Lender as follows:

                           (A) Article 3 of Credit Agreement. Except as amended
hereby or shown on the replacement disclosure schedules attached to this
Amendment, the representations and warranties contained in Article 3 of the
Credit Facility Agreement are accurate on and as of the date hereof.

                           (B) No Adverse Change. Since June 30, 1996 there has
been no adverse change in such Borrower's business, operations, or condition
(financial or otherwise).

                           (C) IPO. Borrowers have (1) raised a minimum of
$24,000,000 in net proceeds in the IPO and (2) have cash after repayment of
Lender Outstandings and the Borrowers' Final S Corp. Distributions of at least
$8,000,000.

                           (D) No Defaults. As of the date hereof, no Event of
Default exists and no event exists that would, with the passage of time or the
giving of notice or both, be such an Event of Default.

                           (E) Collateral Security. All Security Documents
continue in full force and effect, except that (i) the Guarantor Pledge
Agreement has been terminated and (ii) the three "Existing Intercompany
Subordinated Demand Notes," each in the principal amount of $15,000,000, from
NCO Group, Inc., NCO of New York, Inc., and NCO Financial Systems, Inc.,
respectively, as borrowers to NCO Funding, Inc. as lender, all of which have
been endorsed and pledged to Lender under the Security Agreement, will be
exchanged for "New Intercompany Subordinated Demand Notes" in the amount of
$40,000,000 each. In addition, the Guaranty has been terminated.


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                  4. Conditions to Closing. Lender's obligation to enter into
this Amendment are subject to the following conditions having been satisfied in
full to Lender's satisfaction:

                           (A) Lender shall have received this Amendment and the
Amended and Restated Revolving Credit Note duly executed on behalf of the
parties thereto;

                           (B) Lender shall have received the Second 1996
Warrant Agreement, Second 1996 Warrant and Second Amended and Restated
Registration Rights Agreement duly executed on behalf of the parties thereto;

                           (C) Lender shall have received all other documents,
instruments and proceedings which it reasonably may request, in form
satisfactory to Lender

                           (D) Lender shall have received $50,000 in cash,
representing the balance due on the cash portion of Lender's facility fee;

                           (E) The Borrowers shall deliver to the Lender
evidence satisfactory to the Lender that the Borrowers have purchased interest
rate protection with a financial institution acceptable to the Lender pursuant
to which the Borrowers have reduced their risk of exposure to a LIBOR Rate in
excess of 9.5%. This interest rate protection agreement shall be in force for a
period of two years and shall apply to a minimum of $3,000,000 of Obligations;

                           (F) Payment or reimbursement to Lender for all legal
expenses incurred by Lender to analyze, prepare and negotiate and conclude this
Amendment and all related agreements and transactions described herein;

                           (G) Lender shall have received resolutions executed
by appropriate officers of each Borrower authorizing each Borrower to increase
the Revolving Credit Committed Amount and execute this Amendment;

                           (H) Lender shall have received opinions from
Borrowers' lawyers on such legal matters as Lender may reasonably request; and

                           (I) Lender shall have received New Intercompany
Subordinated Demand Notes, endorsed to Lender, whereupon Lender will return the
Existing Intercompany Demand Subordinated Notes for cancellation.


                                      -13-


<PAGE>


                  5. Continuing Effectiveness of Credit Agreement and Other Loan
Documents. Except as amended hereby, the Credit Agreement and other Loan
Documents remain in full force and effect.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.


                                         NCO GROUP, INC.

                                         By:  /s/ Michael J. Barrist
                                            ----------------------------------
                                            MICHAEL J. BARRIST
Attest:_____________________                Title: President and CEO

[CORPORATE SEAL]

                                         NCO FINANCIAL SYSTEMS, INC.

                                         By:  /s/ Michael J. Barrist
                                            ----------------------------------
                                            MICHAEL J. BARRIST
Attest:_____________________                Title: President and CEO

[CORPORATE SEAL]

                                         NCO FUNDING, INC.

                                         By:  /s/ Michael J. Barrist
                                            ----------------------------------
                                            MICHAEL J. BARRIST
Attest:_____________________                Title: President and CEO

[CORPORATE SEAL]

                                         NCO FUNDING, INC.

                                         By:  /s/ Michael J. Barrist
                                            ----------------------------------
                                            MICHAEL J. BARRIST
Attest:_____________________                Title: President and CEO

[CORPORATE SEAL]

                                         MELLON BANK, N.A.

                                         By:  /s/ Liz A. Mellace
                                            ----------------------------------
                                         Name:  Liz A. Mellace
                                              --------------------------------
                                         Title:  Assistant Vice President
                                               -------------------------------

                                      -14-