A slight confusion has cropped up. An AP user was confused to see a bill has the status "Paid in Full" even though the bill was set on Payment Hold. It turns out that this is because the bill was credited in full. Question is is there a way to show a pop up message (or even disallow) applying a vendor credit to a vendor bill IF the bill is Payment Held? I tried to do it using WF but cant think how the application link works on the WF. TIA!

I don't see that you can use a WF as there is no link between documents until the credit is applied and saved. Since I don't think you can control the apply-to list for credits (i.e. exclude bills on hold) then your only option would be SuiteScript.