This study is design to investigate the impact of credit risk management on profitability of saving and credit cooperatives in Bahir Dar town. The research approach applied in this study is mixed in nature. The researcher uses Return on Equity (ROE) as dependent variable and Lending Interest rate (LIR), Collateral requirement (CR), Tenure of credit (TOC), Repayment follow up procedures(RFP) and credit monitoring (CM) as independent variables. The research uses both primary and secondary data, primary data using open ended and close ended questionnaires and secondary data from audited financial statement of cooperatives. Both Descriptive and Explanatory analysis are done. Based on the analysis, collateral requirement, credit monitoring and tenure of credit has significant effect on profitability of saving and credit cooperatives. Competent man power, well established credit administration and monitoring systems and strict application of proclamations, rules and regulations of cooperatives are among the key recommendations forwarded by the researcher.